House of Lords
Monday 4 July 2022
Prayers—read by the Lord Bishop of Manchester.
Long Service of a Member: Lord Trefgarne
My Lords, I take this opportunity to note that our longest-serving Member, the noble Lord, Lord Trefgarne, yesterday marked 60 years since he first took his seat. On behalf of the House, I pay tribute to the endurance of the noble Lord.
Working from Home
The pandemic resulted in an unprecedented increase in the proportion of people working from home—from 19% pre-pandemic to a peak of roughly 50% in June 2020. It has since fallen back to 38%. It remains unclear whether this will persist, and the long-term impact of greater remote working is highly uncertain. The Government are monitoring this closely.
As someone whom your Lordships have kindly permitted to work from home—I wish it was not necessary in my case—I ask the Minister whether the Government accept that the advantages of hybrid working include improved work/life balance, well-being and the ability to care for family and home; enhanced productivity; the retention of more people in the labour market; opportunities for high-quality employment across the regions; a better balanced housing market; revived high streets and stronger communities; and reduced emissions from commuting. Will the Government therefore embrace home and remote working in the Civil Service and the public sector, in the tax and social security systems, and in their levelling-up, digital and net-zero strategies?
My Lords, the Government will accept some of those benefits set out by the noble Lord. However, we also need to think about some of the other effects—for example, evidence also indicates lowered innovation and knowledge-sharing in the workplace due to remote working. So the Government support the ability to work flexibly and support businesses in finding the right approach for them. I think there are many benefits to home or remote working, but those need to be balanced against some of the negatives we can also see.
Will my noble friend the Minister think for a moment about those people who do not work from home but who use their own cars for work purposes? Given that petrol has now reached £10 per gallon, should the Treasury not think about changing the 45p allowance, which barely covers the cost of petrol, let alone other costs? At that level, people have to pay tax and national insurance on any remuneration they receive back from their employer for using their own vehicles.
My noble friend is absolutely right that, even at its peak, only 50% of people reported working remotely, so we must remember the other half of people who were not doing any remote working at all during the pandemic—and even less so now. I understand his concern about fuel costs; this is why my right honourable friend the Chancellor gave the biggest cut to fuel duty that we have seen in a number of decades in the recent Spring Statement.
My Lords, I wonder if the Minister, following her very helpful replies to my noble friend, will ensure that the message she is giving to this House is also given to Members of the Cabinet. When Jacob Rees-Mogg made his remarks, there was a marked decline in the number of applications to public sector jobs, because it is absolutely clear that young people want a different pattern of employment to that which was normal for people like me. They want more hybridity and flexibility—maybe the Cabinet need to understand that too.
I understand the point the noble Baroness makes. We do need to move with the times on hybrid working; however, from the perspective of young people—I am not sure that I am one, but I may be slightly younger—there are some downsides to remote working regarding opportunities to mentor and learn in the job, or for people whose housing situations do not allow them space to work properly. It is all a question of balance. It is also right, after the peaks of what we saw during the pandemic, that people move more towards spending some time in the office and interacting with colleagues.
My Lords, increased home working has led to a dramatic drop in sales of rail season tickets, down to 30% of pre-pandemic levels. Traditionally, rail companies relied heavily on this reliable source of funding. We have been promised for years the modernisation of ticketing on the railways, making tickets simpler to purchase, with cheaper and fairer fares. Can the Minister tell us when we are going to get this long-promised revolution?
My Lords, I believe that quite a bit of it is under way, but I am not as familiar with progress as my colleagues in the Department for Transport will be. What I can say is that an assessment by the National Infrastructure Commission found—the noble Baroness is right—that pandemic restrictions and associated increases in remote working did affect infrastructure use. However, it is too early to assume that long-term behaviour change such as increased remote working would lead to a wholly different pattern of infrastructure. In terms of our approach to transport infrastructure, there is an element of “wait and see” on the effects of the pandemic.
Does my noble friend accept that most sensible employers—I count myself as one—have a balance in this? They bring people in, say, two days a week when everybody works together and gets the advantages of which she speaks. The point of this Question really is that the Government ought not to give the appearance that the way we are dealing with this in the public sector is somehow different from the private sector, which has reached out to this new way of working. In terms of family friendliness it is enormously better, and in my business I certainly find better productivity as a result, because people feel happier about the work/life balance.
I would absolutely echo my noble friend’s language around balance, and he has mentioned some of the other benefits of hybrid working that we have discussed. Each government department sets its own hybrid working policy. The Treasury, for example, expects staff to work 50% of the time in the office and the remaining time at home over a two-week period. I think that strikes a balance.
My Lords, flexible working is one of the many issues that could and should be included in an employment Bill. That legislation has been promised for years, but still we wait for the Government to bring forward proposals. With these questions becoming more urgent, why did the Government opt against including that Bill in the recent Queen’s Speech?
My Lords, I am afraid that I am not sure I can add to any previous answers on the employment Bill, except to say that we are still committed to bringing one forward when parliamentary time allows. However, progress on our Good Work agenda does not need to wait for the Bill: we have made progress on a number of initiatives, either through secondary legislation or policy changes, and we will continue to look for those opportunities to make progress on that agenda.
My Lords, I have to confess that I thoroughly enjoyed the opportunity to work from home: it was the very first time in 35 or 40 years that I had been able to spend that much time with my family. What assessment have the Government made of the impact of domestic violence on women who have continued to work from home and have additional responsibilities as carers?
There are couple of points in the noble Baroness’s question. We have seen a positive impact overall on those with caring responsibilities, with the increase in hybrid working and more opportunities for them to stay connected to the workplace. But she also mentioned domestic violence, which was another issue during the pandemic. We saw that it was important for people to have the option to come into the office as a safe space for them to work, because home is not always a safe space for everyone, sadly.
My Lords, will the Government bear in mind the many people who do not have the opportunity to work from home? Those who work in the National Health Service and on the front line in the police service, along with many other public sector workers, do not have the opportunity to work from home. There must not be a division between those who have to attend work and those who do not.
My noble friend makes a very important point. It is incumbent on all of us to see life through not just our own experience but that of others. As I said, at the moment the majority of people do not work from home at all, and we need to understand that too.
My Lords, further to the question of the noble Lord, Lord McLoughlin, is it not true in so many respects that the people who cannot work from home are the people on whom society depends most? You cannot be a nurse, a bus driver or a plumber and work from home. There is a whole range of people who cannot do so, and if there are tremendous benefits from flexible working, maybe we ought to be looking at ways of reducing the length of their working week as compensation for the fact that they simply cannot ever work from home.
Where I do agree with the noble Lord is that flexible working encompasses a whole range of different working practices, not just working from home or hybrid working; it might also include part-time working or job shares. There are huge opportunities in this space, including for people for whom working from home is not an option at all. The Government will continue to take forward work in that area.
My Lords, we welcome the cessation of hostilities between the Government of Ethiopia and Tigrayan forces and the subsequent uplift in aid deliveries, but the humanitarian situation remains dire for those impacted by the conflict. We are, of course, in regular touch with Ethiopian and Tigrayan leaders and the AU’s high representative, Olusegun Obasanjo, and are working closely with the G7. The UK’s special envoy to the Horn of Africa and the Red Sea raised this very issue with Ethiopian PM Abiy in May.
The Minister will know the huge scale of suffering through hunger and malnutrition in northern Ethiopia, with the UNOCHA reporting up to 3 million people desperately in need of food aid. Despite the welcome increase in supply, there are continued reports in some parts of Tigray that internally displaced people are still resorting to eating wild plants to survive. What steps are the Government taking to end the continued humanitarian blockade and ensure that aid is received in all parts of Tigray?
My Lords, I agree with the noble Baroness that the challenge is immense across Ethiopia. In particular, 9 million people in northern Ethiopia are in need of life-saving aid due to the conflict and nearly 30 million people require life-saving humanitarian aid throughout Ethiopia in 2022. The UK has been working with our UN partners. We were involved with the very first set of convoys that went in to provide humanitarian relief and continue to do so. We have been lobbying the Ethiopian Government to restore access to cash banking and communications, and since November 2020, the UK has provided more than £86 million to support vulnerable crisis-affected communities across Ethiopia, reaching communities in the Tigray, Afar, Amhara, Oromia and Somali regions.
My Lords, around 26,000 women and girls need services following conflict-related sexual violence. This violence has led to babies being born and their mothers ostracised. Can my noble friend provide an update following the deployment of the UK’s Preventing Sexual Violence in Conflict Initiative team and say when its report will become available?
My Lords, as my noble friend will be aware, CRSV remains a key priority for the UK Government. The Foreign Secretary has made sexual violence in conflict one of her top priorities. In northern Ethiopia, the UK has provided £4 million of support to survivors of sexual violence. My noble friend is correct that we have deployed experts; we are working with UNICEF and the UNHCR to ensure that full support can be provided to survivors. I will be pleased to provide a briefing to my noble friend on the detail of our support and the focus we hope to bring at the PSVI conference in November.
My Lords, has the noble Lord had a chance to look at the link I sent him over the weekend to a French documentary, the first in 18 months to be undertaken by international, independent journalists who had access to Tigray, entitled “Tigray, the Land of Hunger”? It develops the point made by the noble Baroness, Lady Wheeler; it is about the deliberate starvation of the people of Tigray, which is a war crime. Does the noble Lord agree that, with 6 million people under siege and starving to death—a situation that will be only worsened by the blockades in Ukraine—and Tigray being without electricity, internet, banking services and medical supplies, the situation is dire? When will the FCDO’s JACS report—the joint analysis of conflict and stability—in Ethiopia be completed? Are we preserving the evidence, so that those responsible for atrocity crimes will be brought to justice? Does he agree that there can be no peace without justice?
My Lords, I totally agree with the noble Lord’s final point. We are ensuring through the deployment of experts and in working with key international partners that we do exactly as he suggests and protect the evidence so that we can bring the perpetrators of these crimes to justice. As the situation has been enhanced by our ability to provide humanitarian support, the report is being updated. We were just talking about home working; I regret to say that it is perhaps also not part and parcel of the job of a Foreign Minister. This weekend I spent most of my time in Birmingham, so I have not had time to read the report for the OSCE plenary, but I will look at the link that the noble Lord has sent me.
My Lords, the World Food Programme estimated today that 40% of the population of Tigray are now with extreme lack of food. It is spreading, with rising hunger in the neighbouring regions of Amhara and Afar, as well as in Sudan—where I was three weeks ago—and in South Sudan. With an estimate that Somalia may have a famine, for the first time in very many years, the Horn of Africa will see hunger on an unprecedented level. I reiterate my call for the UK Government to convene a London summit on hunger to co-ordinate the international effort. I applaud what the UK is doing, but it is not enough without the rest of the international community. Without that co-ordination, we may see hundreds of thousands—if not millions—of people die this summer of something that is absolutely preventable.
My Lords, I agree with the noble Lord about the need for co-ordination. As I said earlier, that is why we are working with key UN agencies in particular, which are among the first to gain access to some of the regions the noble Lord has highlighted. We are looking specifically at other regions, as I said earlier, including Oromia, Somali and Amhara. However, the point is well made. We are co-ordinating our efforts; on whether it requires an international conference specific to this issue, a broader range of conferences is currently taking place where this key issue of food security and famine relief should be central to the thinking and outcomes.
Does the Minister agree that it is surely one of the tragedies of our time that, just a few years ago, Ethiopia was considered a model and one of the African success stories? Since then, the Nobel prize-winning Prime Minister has alienated minorities, brought in Eritreans on his side and generally helped to cause the humanitarian crisis which is the subject of this Question. Was this matter raised at the recent CHOGM summit in Kigali because of the proximity of Uganda and Kenya? What can we do in terms of co-ordination?
My Lords, I agree with the noble Lord about the tragedy of what has happened in Ethiopia, and he is right that Prime Minister Abiy was very much at the forefront of bringing peace and security to the country and the surrounding regions. It is deeply tragic that we are seeing the conflicts unravel in the way we are. However, there is a silver lining to this very dark cloud, not just in terms of humanitarian support but the recent announcement on all sides to agree for discussions to take place, and we full support those efforts. On CHOGM, of course we raised the issue of food security and, in particular, that of conflict prevention. In bilateral discussions, the Foreign Secretary and my colleague, the Minister for Africa, raised these issues directly with the Government of Ethiopia.
My Lords, does the Minister agree that our selling arms to neighbouring Eritrea—a country with a dismal human rights record and an active participant in the maiming and killing in Tigray—is not exactly helping towards a peaceful resolution?
My Lords, again, without getting too much into the arms sales issue, as I have said repeatedly from the Dispatch Box, we have a very rigid policy when it comes to arms and defence sales across the world; those same principles are applied irrespective of which country may be requesting that support or assistance from the UK.
My Lords, this conflict is a humanitarian disaster of monumental proportions; 9 million people have been affected by it and about half a million people have died. Turning to the peace process which has been proposed, the TPLF does not trust the African Union to lead the peace process and wants Kenya to lead it instead. Given that on Thursday last week Prime Minister Abiy’s spokesperson spoke very positively about the relationship between Ethiopia and Kenya and between Prime Minister Abiy and President Kenyatta, should we not argue for the Kenyan Government to work alongside the AU and its envoy as a compromise solution? Surely with what is at stake, that is what is necessary: a compromise.
My Lords, the noble Lord makes a very valid proposal and I assure him that in our engagement with Kenya the importance of the situation in Ethiopia is part and parcel of our discussions. I think there will be a change of leadership very shortly in Kenya, with President Kenyatta stepping down. But it is equally important that we engage proactively to ensure that whoever then goes on to lead Kenya is fully engaged in finding a solution to this process.
My Lords, the question of arms sales has been raised. Does the Minister accept that consistency by the United Kingdom on the provision of licences for arms sales around the world would be extremely helpful, rather than the current inconsistent way in which such issues are addressed? Does he concur that peace in this troubled region would be enhanced by sustained and unhindered humanitarian access, the restoration of internet and banking services, and bringing to an end youth conscription throughout the region, all of which would be most welcome?
My Lords, on the noble Lord’s second suggestion, I have already alluded to the fact that some of the very points the noble Lord has raised are being discussed directly, and one hopes that the outcomes of these discussions—as and when they take place—will see a real focus on the priorities that he has articulated. On arms sales, I have to disagree; as I said, we have a process that we seek to follow in every negotiation and discussion we have. Of course, there are always learnings to improve that process and we adapt those accordingly.
NHS Improvement has allocated £150 million of additional funding to ambulance services to help address pressures, alongside reducing ambulance handover delays. Even though the pandemic placed significant pressure on response times, there have been improvements in all response time categories in both April and May, with average response times to category 2 emergency calls—such as strokes and heart attacks—reduced by about 11 minutes and 24 seconds in May alone. Work continues with the service to restore performance.
My Lords, it is difficult to thank the Minister for the Answer because it is a totally unsatisfactory one. I have been raising this question for about the last six months. The reality is that, as the noble Baroness, Lady Uddin, told me when her son had a stroke and 999 was called, it took nearly six hours. He suffered serious consequences as a result of that. People are dying as we sit in this Chamber, literally thousands of them. Why? Because paramedics are waiting with trolleys in hospitals for a bed. There is a simple solution to this problem, which I have been suggesting to the Minister. I have also given him a place—Wolverhampton—where they have solved this problem. Yet, still we do not seem to treat this as a matter of urgency. It is a national disgrace and I want an assurance from the Minister that real action is to be taken—and that does not mean an 11-minute improvement.
I begin by thanking the noble Lord for his engagement with me and the department on this issue. When the noble Lord has sent me details or suggestions, I have passed them to the relevant officials within the department. I hope I can assure that noble Lord that I have done that. As the noble Lord will know, within departments we have particular portfolios and I have to hand it on to the person responsible. In terms of the recovery plan, the NHS has published a 10-point action plan for urgent and emergency care. I will not go through the whole action plan, but it includes dealing with paramedics, recruitment and retention, and more space in A&E departments. At the same time, can requests be handled by telephone by clinicians and patients diverted to a more appropriate resource? All these have been looked at. I understand that the noble Lord thinks it is unsatisfactory, but we have been hit by the pandemic, we are trying to recover and there is a plan.
My Lords, the noble Lord, Lord Young, is right that handover times have a particular impact on ambulance services. I was pleased to hear the Minister mention recruitment and retention in A&E departments. This is a long-standing problem in emergency services. The Royal College of Emergency Medicine states that emergency medicine has a high attrition rate. I know that a number of steps have been set out. Can the Minister state what success they are having and, if they are not succeeding yet, what further steps the Government plan to set out? We need a change in direction as soon as possible.
I thank my noble friend for the question and also for the point that this happens at number of different points in the system. Clearly, there are recruitment campaigns for doctors and nurses. In addition, the number of ambulance and support staff has increased by almost 40% since 2010. Call handler numbers have also increased since the start of May 2022; we have 400 more. In addition, there are pledges to increase the training of paramedic graduates nationally by 3,000 per annum. All these will take time to get into the system, which is still recovering from the pandemic.
My Lords, when Sandra Francis of Oswestry had a cardiac arrest a few months ago, her son had to do 35 minutes of CPR waiting for an ambulance delayed in handovers at A&E. Sadly, she died. Her son said:
“An ambulance should be a way of getting someone to hospital. It shouldn’t be a waiting room sat at the hospital.”
He is right. Ambulance delays are the very visible part of the A&E crisis and the wider shortage of hospital beds, doctors and other healthcare professionals. Again, I ask the Minister: what are the Government doing to remedy this much wider emergency that is causing preventable deaths right now?
The noble Baroness will be aware that there are a number of things going on with the 10-point plan. Maybe I will go through some of the points now. We are supporting 999 and 111 services, making sure that the appropriate person answers the call; supporting primary care and community health services to manage those services; making more use of urgent treatment centres; and providing more support for children and young people. Sometimes people ring 999 but do not need emergency treatment and they can be redirected to another clinician, who can speak to them and that takes pressure off. We are recruiting more staff and looking at more prevention and looking at different rules which prevent the appropriate workflow through the system.
My Lords, some months ago, as my wife lay dying in my arms, I phoned the 999 service. The man answering the call asked me a litany of questions and asked me to count her number of heartbeats per minute. That waste of time is critical; with a cardiac arrest you have only a few seconds. I had to interrupt the cardiac massage that I was giving my wife until the emergency services arrived, but of course they had not been called yet. When eventually the man backed down, it was obvious that he had not been trained to ask the right questions. Can the Minister assure the House that there is proper training for people who answer these calls at these critical times, when they are dealing with someone who may recognise that their close relative is dying, and that the latter can hear what they are saying on the telephone? It is highly dangerous and that makes it very difficult. The last thing we hear as we die is usually the voice of someone who is with us.
I thank the noble Lord for sharing that very personal story. Clearly, there are too many incidents of this kind. One of the issues that we have to be very careful about as we look to recruit more numbers is to look at the system and at how to divert the less urgent calls. Probably in that case the person was trained to ask particular questions to ascertain how serious or urgent it was but, clearly, that was inappropriate. I will take that case back to the department and see whether I can get some answers.
My Lords, our prime objective must be to eliminate all these unacceptable delays as quickly as possible. Can the Minister confirm what work is being done in the interim to ensure that effective pastoral care is available for those who are currently waiting for long periods in ambulances, particularly for the many for whom last rites and other rituals that take place at the point of death form an important part of their faith?
The right reverend Prelate raises an important issue for those of faith who want to share their last moments of life with someone. I am afraid that I do not have a detailed answer, but I will go back to the department and write to the right reverend Prelate.
My Lords, as other noble Lords have said, ambulance delays are a symptom of pressures elsewhere in the health and care system. At the end of April, 62% of over 20,000 patients in England who were medically fit to be discharged remained in hospital, largely due to a lack of appropriate social care provision. Can the Minister say how and when there will be a fully costed workforce plan to ensure that the relevant staff are in place to urgently tackle this bottleneck?
The noble Baroness will know from the debates that we had during the passage of the Health and Care Bill that there is a 15-year plan; Health Education England has been tasked with that. In addition, significant amounts of things are being done at the local trust level, so it is not just a sort of five-year, top-down Soviet-type plan but is looking at recruitment at a local level. There is also a national discharge task force that works with national and local government and the NHS to identify long-term sustainable changes which could reduce delayed discharges and ensure that patients are in hospital only for as long as they need to be.
My Lords, what role does the Minister think the police might have to play in this? Last Wednesday I was knocked down in Great George Street by a bicycle and rendered unconscious. Although a paramedic arrived from St Thomas’ by bicycle quite quickly, there was no ambulance. I was very grateful to the police for taking me into St Thomas’ and depositing me at the A&E. That was very helpful, and I wonder whether the Minister thinks that might happen more often.
I thank my noble friend for sharing that experience, and it is good to see that he has recovered and is able to ask the question. One interesting thing that is being looked at as part of the overall review—again, we have to be very careful about unintended consequences—is how many of these cases can be treated at the scene without requiring the patient to be taken to hospital. That will need careful thought as it is a difficult trade-off. In this case, clearly, they were looking at the possibility of someone else taking my noble friend to hospital, and he was fortunate that there was a police officer nearby who was able to do that. However, with any of these interventions we have to be careful and make sure that we are fully aware of unintended consequences that could make things worse.
West Coast Main Line
My Lords, train operating companies’ performances are independently assessed against their contracts periodically across set criteria. An evaluation is under way and therefore it would be inappropriate for me to comment at this time. Once the evaluation is complete, results will be published.
Does the Minister recollect our exchange on 27 April, when she said that this company had the lowest possible passenger satisfaction, scoring only one out of five? Will she accept from me that since then the performance has been even worse? The company is now at the bottom of the intercity league so far as delays and cancellations are concerned. As the company’s contract expires in October, what plans do the Government have to renew it or to find an alternative, bearing in mind that anyone running the west coast main line from October qualifies to run HS2 in the future? Will we really hand over Britain’s flagship railway to a company that is 70% controlled by the Italian Government and that has made a complete mess of the trains that it is responsible for running at present?
I do indeed recall an almost identical Question on 27 April. It is a pleasure to be answering it again. Avanti West Coast achieved one out of three, not one of five, which I agree is still terrible—it was at the bottom—but the Government hold it and all other train operators to account via the contracts. Avanti West Coast is still on an ERMA and, as the noble Lord pointed out, we are looking at potentially moving it and allied organisations on to a national rail contract within the third tranche of the national rail contracts. Will it definitely happen in October? That is not certain at all. We will look at its performance. We will think about the other options that we might consider in terms of incorporating HS2, for example, and being the shadow operator of HS2. Nothing is certain at this stage.
My Lords, there are reports that Avanti West Coast has withdrawn the 0745 Stoke-on-Trent to Manchester Piccadilly service, a vital commuter service. It has been withdrawn until September, apparently due to staff shortages. This is clearly not acceptable, as it was done without any notice. What are the obligations for train operating companies to give due notice and to undertake public consultation prior to withdrawing train services that they are contractually committed to provide? There is an issue here in relation to season ticket holders. Will they be given full refunds? What penalties will Avanti West Coast suffer if it has not obeyed the rules that are attached to its obligations?
My Lords, I am grateful to the noble Baroness for the warning about the 0745 Stoke-on-Trent to Manchester but, as she pointed out, the removal of that service is temporary. It will be reinstated. Noble Lords will be aware that there has been a significant uptick in the number of cases of Covid recently, leading to short-term staff unavailability. That has had a knock-on impact on training for new staff coming in to support these services. Avanti West Coast is working very hard to minimise the impact on passengers. All cancellations are regrettable. Often these circumstances are quite fast-moving, and changes are temporary, so traditional consultation does not usually happen. However, usually the train operating companies will work with the local markets and with key stakeholders to understand any impact.
My Lords, Great British Railways is coming into effect in, I am sure the Minister hopes, a couple of years. She will be directly responsible for all the trains that are on time and late, as well as for the infrastructure. Does she relish that? If not, who will she blame?
I hope that it will not be me personally, as I am not the Rail Minister, though it will be the Government. However, Great British Railways will be a body set up specifically for all those things that the noble Lord has pointed out, which will be to the benefit of passengers and freight since it will bring everything under one overarching umbrella. Will the Secretary of State and any Rail Minister at that time micromanage the network? Absolutely not. However, there will be one guiding mind. That is our ambition for Great British Railways.
My Lords, I fear the Minister will never be able to see the virtues of Stockport, which is a vibrant community and is business- friendly. On Saturday, eight trains to Manchester were cancelled; on Friday, two; and on Thursday, one. The 2.40 was cancelled at short notice today as well. Every time a train is cancelled, hundreds of real people are disadvantaged. Is the Minister certain that there is not a sensible alternative to handing over HS2 to Avanti, as the noble Lord, Lord Snape, spoke about? You would not put Herod in charge of an orphanage, would you?
My Lords, Avanti West Coast is not the only train operating company currently facing difficulties, which are principally due to the uptick in Covid, as I suggested. There is a downward trend in the public performance measure and the moving annual average across all train operating companies, but it is expected that this will be proactively mitigated. The DfT will actively manage this process through the schedule 7.1 sections in the franchise agreements to make sure that we hold people to account, get the performance data, and understand why things went wrong and what we can do to fix them. Our goal is to deliver for passengers and for freight.
My Lords, given the awful service on the west coast and on other railways, and given that fares in the United Kingdom are so much greater than on the continent, including in Italy—which owns a big percentage of the west coast firm—will the Minister not agree with my noble friend Lord Berkeley about moving back to Great British Railways and that the unbelievably complex privatisation of the railways in Britain has been a total disaster? There are some guilty men opposite who should admit it.
I cannot agree with the noble Lord at all. Bringing the private sector into the railways probably rescued them. The number of passengers has gone up enormously since the private sector was involved. There have been problems more recently, principally owing to the Covid pandemic, but the Government will keep the private sector involved in our railways. These national rail contracts will become passenger service contracts, and the noble Lord is most welcome to respond to the consultation on them.
My Lords, there seems to be consensus that Avanti is one of the worst train operators in the country, and that is against a very low bar. Can we turn to the other side of the contract? Since 2010, the cost of a season ticket on the west coast main line between Coventry and London Euston has risen 49%, from £7,096 to £10,546. This represents an increase of almost £300 a year. What steps are the Government taking to address increasing rail fares on the west coast main line?
The Government are very conscious of increases in rail fares across the entire network, which is why we used the July RPI figure to increase the regulated fares this time around. We could have used the later figure and it would have been higher, but we deliberately decided to use a lower figure. How we will take subsequent rises forward is still under consideration. We recognise the impact that the cost of living challenge is having and will bear this in mind as we think about future price rises.
My Lords, does the noble Baroness appreciate the negative effect that performance on the west coast line is having on potential industrial and economic development in north Wales? Undermining rail connectivity between north Wales and other industrial centres in England means that the convenience of being located there is now very difficult to sell to incoming industrialists. Are the Government satisfied with that result from their policy?
The Government are not satisfied with the current performance of the train operating companies, and we are doing all we can to work with them and get through this difficult phase of the current Covid uptick and improving timetables. The timetables have been improved, not only by increasing the number of trains coming in on the west coast main line, but by ensuring that future timetables are flexible and respond to demands such that, if people choose to invest in north Wales—I encourage them to do so—they would have appropriate rail services.
Arrangement of Business
My Lords, I want to raise my concern—and I think there is concern across the House—regarding the preparedness of the Procurement Bill, which is an extremely important Bill that should have considerable support across the whole House. We have had 300 government amendments, many of which are not technical. I invite all noble Lords to look at today’s Marshalled List for the Grand Committee. Amendments have been tabled late, and groups of government amendments were still be sorted out over the weekend. Yesterday, the Government sent out another list, apologising for the ongoing issues, thanking Members for their patience, inserting the missing amendments and removing the duplicate ones. I fail to see the benefit of publishing a Bill in such a poor state.
This is a Lords starter Bill, yet on the first day in Committee so many government amendments are needed. Surely it would have been better for the Bill to be published when it was in a fit state to be published and then only at that point would the Second Reading and other stages take place.
I have discussed my frustration with the usual channels and we have found a way forward today. I am grateful to the Government Chief Whip for that, but this is no way to proceed generally. I ask the Government Chief Whip to go back, speak to his colleagues in government and government departments and suggest to them that, irrespective of whether a Bill would be generally supported by the whole House or is a more controversial aspect of the Government’s programme, it is unacceptable for it to be brought forward in this state. Every Bill brought forward in this state will have major problems here. The House deserves to be treated with respect, and the handling of the Procurement Bill fails to do that. It is just not what we expect. I ask the Government to look at this again because this Bill will quite rightly have a very difficult time in this House because of the way the House has been treated. I will leave it there. I shall not talk about the Schools Bill, which is in an equally parlous state. I await the Government’s response.
My Lords, in many respects I completely agree with the noble Lord, Lord Kennedy. I apologise to the House, and particularly to some of the government Front-Benchers who were working all weekend, as was my office, who have received the list of amendments. I agree with the noble Lord that this is not the way things should be done. I accept that. It is not totally without precedent, but the fact that it was done before is not a good excuse.
As I said to the noble Lord, Lord Fox, last week, I have taken more than 200 government amendments through and the way we had to do it then and the way we are doing it now is by talking to the usual channels. I am grateful to the noble Lord and the noble Lord, Lord Stoneham. We have decided to stop at the point where there is a particular problem for the Opposition Front Bench so that they have more time to prepare for the group, so we are going to do only the first three groups. It might help the whole House to get the Marshalled List a day earlier so that the majority of the amendments with their numbers would be made available to Members earlier so we would know the order in which they are coming. That would still allow manuscript amendments and other additional amendments later. That can be taken forward in the Procedure Committee.
We will do only three groups today. The usual channels have agreed that that is the way to go forward. I agree with the noble Lord that this is not an ideal way to proceed. I will certainly take the message back to other parts of government. I can only apologise again to him and to the House.
My Lords, I thank the Chief Whip for what he said, and I agree with him about the Marshalled List. Since I have a considerable number of amendments in the Procurement Bill, can he assure me that, given only three groups are to be debated today, there will be ample time to deal with all the other amendments in this important Bill and, if necessary, to allocate further days in Committee for that to happen?
I think you can take that as read, because one of the features of this House, and one of the nightmares for the business managers, is the fact that noble Lords can talk for as long as they like. If we do not finish within the appointed number of days, we have to find more time. I accept what has been said. One of the things we will try to do is to indicate more clearly what is genuinely a technical amendment and what is a substantive amendment that needs discussion.
My Lords, I am grateful to the Minister for having made this statement, but will he appreciate that the effect of this sort of change goes beyond the usual channels in this House? It affects those outside who have to live with the consequences of the legislation and want to brief Members of the House accordingly. In this instance, the weekend before last, I spent the whole weekend going through all 80 amendments to have a telephone conference—as did other noble Members on the Liberal Democrat Benches and the Cross Benches—with members of the Welsh Government who are seriously affected by this. When this barrage of amendments comes forward, it totally undermines that sort of discussion that should be an essential part of the process of government, to ensure that the legislation is workable for those it affects. What discussion, if any, did he have with the Welsh Government?
The short answer is that I did not have any discussions with the Welsh Government, but I completely accept that when amendments come in late—and when government amendments come in late—it does affect more than just the Front Benches and the Members of this House. The people who brief Members of this House will be affected and the devolved Administrations will be affected—I absolutely accept that. As I said right at the beginning, I do not think having 342 government amendments at the last minute is a suitable way forward. I hope we will do our best not to do this again.
My Lords, it is much appreciated that my noble friend has come to the Dispatch Box to make this apology, but it is not really his fault. The fault lies with Ministers in this Government not doing their job properly, and with parliamentary draftsmen producing such material. Again and again, we see framework Bills that are full of Henry VIII clauses, we find bills that are not thought through, and amendments being tabled at the last minute that have not even been discussed in the House of Commons. Frankly, it is not treating this House with the dignity it deserves and it is a very bad way to make law. Should we not find some method whereby Ministers in the other place can perhaps be educated on what this place does, how it operates and what it expects?
Draft Mental Health Bill Committee
That it is expedient that a Joint Committee of Lords and Commons be appointed to consider and report on the draft Mental Health Bill presented to both Houses on 27 June 2022 (CP 699), and that the Committee should report on the draft Bill by 16 December 2022.
My Lords, the Bill of Rights fulfils a key manifesto commitment of the Government. We have already conducted a thorough and detailed consultation on it, which is why we think it right to introduce the Bill now and let the whole House debate it. Having said that, I am sure my right honourable friend the Deputy Prime Minister and my noble and learned friend Lord Bellamy would be pleased to engage with the noble Lord, other noble Lords and the relevant Select Committees as the Bill makes its way through Parliament.
UK Infrastructure Bank Bill [HL]
Clause 2: Objectives and activities
1: Clause 2, page 1, line 12, at end insert—
“(ii) to adapt to any current or predicted impacts of climate change identified in the most recent report under section 56 of the Climate Change Act 2008, and(iii) to protect, enhance and restore the United Kingdom’s natural capital, including by supporting efforts to meet the targets and improvement plans under Chapter 1 of Part 1 of the Environment Act 2021,”Member's explanatory statement
This amendment clarifies that the Bank’s objective to help tackle climate change includes mitigation of climate change, adaptation to climate change, and the protection and restoration of the UK’s natural capital.
My Lords, I declare my interest as a director and co-chair of Peers for the Planet.
I thank the Minister for the constructive dialogue that has taken place throughout the passage of the Bill, including the meeting with the bank’s chair and chief executive last week to discuss their new strategic plan and the subsequent letter from the chief executive, which we received today. These meetings have been useful and have provided some comfort that the bank’s leadership, which is obviously of very high quality, has considered and intends to address many of this House’s concerns about issues such as natural capital, climate resilience and how certain types of infrastructure, such as gas and roads, will be treated. It would, however, be extremely helpful if the Minister made clear from the Dispatch Box the position on gas exploration and road building, concerns about which were raised in Committee and in our meeting. Although I know she believes that those concerns are unfounded, it would be helpful to have on the record some of the assurances that we received informally.
I welcome the Government’s amendment on energy efficiency, to which I have added my name. It is a much-needed signal of their recognition of the urgency and importance of making progress in this area. I hope the Minister may have an opportunity to have a word with her noble friend about the Social Housing (Regulation) Bill, where we could do with some movement on the same topic.
Where we have not made progress in making changes to the Bill is on the environmental priorities, including nature-based solutions, the circular economy and adaptation. It is with these issues, about which we spoke at length in Committee, that this group of amendments is concerned. I have tabled Amendments 1 and 6A, while similar related issues are raised in amendments tabled by the noble Lords, Lord Teverson and Lord Holmes of Richmond, and the noble Baronesses, Lady Jones of Whitchurch and Lady Bennett of Manor Castle. My amendments have signatories from all sides of the House, for whose support I am extremely grateful. Indeed, the Minister herself recognised the importance of these issues but simply queried the need to spell them out in the Bill.
Following the Minister’s comments in Committee, my Amendment 1 no longer sets out a third stand-alone objective for the bank, which she indicated would be extremely difficult to do, but is limited to expanding on the climate change objective to clarify exactly what
“to help tackle climate change”
means for the bank in practice, and to reflecting what has been indicated by the Chancellor, the Minister and the bank itself—that is, that resilience and adaptation measures and nature-based solutions absolutely fall within the scope of the climate change objective.
Given the consensus on this, it is hard to understand the argument against including these additional proposed new subsections and making clear that the bank has within its founding objectives a coherent, integrated response to climate change, and sending a clear message to the markets that these are priority areas for market development. We all agree on this, so why do we not make that clear to everyone else out there?
Including nature in the Bill in no way ignores the fact, as has been argued, that the market for nature-based solutions is nascent. What it does provide is a strong signal that the bank recognises that it has a role in developing capacity towards a pipeline of investable projects and will be poised to act—crucially, encouraging others to do the same—when these come to fruition. Moreover, the bank has a role now in helping build and develop these markets, including through taking a nature-positive approach to near-term projects, building internal capacity for future projects and taking a joined-up approach across government-related bodies, including UKRI, the British Business Bank and local authorities, to help seed projects and initiate the local capital and innovation needed to bring those projects to market.
On adaptation, we are told that it is agreed that climate-resilient infrastructure is critical to reaching net zero, and that mitigation and adaptation will be considered together. But even the Climate Change Committee’s most recent progress report last week observed that the UKIB consultation on investment priorities focused on key net-zero infrastructure priorities, but
“has no mention of adaptation.”
Clarity, focus and policy direction are needed.
Amendment 6A, the second tabled in my name, offers an alternative approach to these issues by including the circular economy and nature-based solutions in the definition of infrastructure, by making explicit that the infrastructure solutions set out in the indicative list in Clause 2(5) include those related to the circular economy and nature. As the Minister will have noticed, it mirrors the approach that the Government themselves have taken to energy efficiency.
I have already spoken about the importance of including nature in the Bill. It was generally accepted how important an issue it was in Committee, so I can be brief on this point. It is not in question that nature-based solutions play a role. The bank’s new strategic plan, which is focused on short initial timescales, already provides examples of some of the main near-term opportunities in the water sector for nature-based solutions. Explicitly stating that nature may play a part in infrastructure projects which realise the bank’s objectives would provide the confidence and the clarity needed to give momentum to the development of these solutions.
Similarly, adopting circular economy structures within the definition should be uncontroversial and a signal of how infrastructure projects may be approached. The bank’s strategy already says that it is
“open to financing … circular economy projects.”
A circular economy approach is completely in step with producing positive synergies between the bank’s objectives. Circular economy principles recognise planetary boundaries, promote fairness and reduce overconsumption. It is estimated that circular economy infrastructure could support up to 450,000 jobs by 2035 in reuse, recycling and remanufacturing. Crucially, those jobs would be in occupations and areas suffering higher rates of unemployment.
In our debates, the Minister spoke at length about the need for clarity, but the Bill is Parliament’s only opportunity to be not only clear but explicit about policy priorities. The Government recognised that by proposing their own amendment on energy efficiency. I believe that there is support all around the House for taking exactly the same approach to nature-based solutions and the other issues covered in these amendments. I beg to move.
My Lords, I am pleased to follow the noble Baroness, Lady Hayman. I also welcome the Minister’s and the Government’s change of mind, if you like, on including energy efficiency specifically in the Bill. We all know that the International Energy Agency cried out about developed nations not doing anything about energy efficiency. We also know that it is the cheapest and most effective option: this programme would avoid huge amounts of further capital expenditure. We have not been good at making sure that we pursue that for our housing or building stock.
Having said that, energy efficiency, as measured by output against energy per year, has gradually increased over the years in this economy. This is the silent way of reducing the energy bills that so many of us receive in our inboxes these days—I was going to say through our letterboxes—and I really welcome that. But it is not enough.
I put down an amendment, similar to the noble Baroness’s, on including “biodiversity” and the recovery of nature as an objective. I do not understand why the Government do not find it straightforward to include this, because it accepts that there is a biodiversity emergency. The Treasury in particular produced the fantastic Dasgupta report, which went through the whole area of natural capital, partly covering how we can solve this issue but also clearly painting the challenges. I congratulate the Treasury on having initiated that report but perhaps not quite so much on the follow-up to date. But here is an opportunity to put this into the Bill.
However, if we cannot have this as an objective in the Bill, I very much support Amendment 6A tabled by the noble Baroness, Lady Hayman, which references
“the circular economy, and nature-based solutions”.
This could be a major step for government policy on the circular economy, which was very well described by the noble Baroness. But I get the impression that, out there in the real world, people are enthusiastic about local repair shops and being able to mend the stuff they buy so that they do not have to buy it again, saving money and resources and helping on climate change. So, the circular economy element is equally important.
Of course, nature-based solutions are a natural way—literally—not just for a number of climate change and biodiversity recipes but to help the natural environment in all sorts of ways. They do this more cheaply and, compared to just pouring concrete, have wider effects, as we know, on areas of adaptation like water quality and flooding, which have been so neglected, as the noble Baroness said.
I favour Amendment 9, tabled by the noble Baroness, Lady Bennett. If we saw any UK Infrastructure Bank investment in roads, we would be concerned about its climate change objectives. I also strongly support, and have put my name to, Amendment 11 in the name of the noble Baroness, Lady Jones of Whitchurch. I am sure that she will explain this herself, and I will not remark on it at this stage.
My Lords, I rise to speak in particular to my Amendment 9, and I thank the noble Lord, Lord Teverson, for his support. I very much agree that climate change means that we cannot be building new roads, although big issues of air pollution are of course also addressed in this group.
I have to begin, since I do not get the chance to do it very often, by commending the Government on their amendment on energy efficiency. It demonstrates the sentiment of our debate in Committee—and indeed throughout the House and the country—and shows that campaigning really does work. Let us see lots more of it.
Essentially, I agree with everything the noble Baroness, Lady Hayman, and the noble Lord, Lord Teverson, have said, so I will not repeat those points. However, we are increasingly hearing from the Government about the importance of biodiversity and the state of nature. Indeed, I had the pleasure recently of attending an event at the Groundswell Regenerative Agriculture Show & Conference, at which the Government and Members of this House and the other place expressed their concerns and spoke of the importance they place on restoring nature. Surely, the Infrastructure Bank should be explicitly directed to do that.
As the noble Baroness, Lady Hayman, said, we are talking about sending a message to the bank and to the country about the importance of biodiversity in nature, and we can also look to the international stage. We see reports expressing grave concern about the state of the COP 15 biodiversity talks, and the entire nature community is screaming out for leadership in those talks. Clearly, as the chair of COP 26, it should be our responsibility to lead the way. As the noble Baroness said, if the Government are saying, “We already mean this anyway”, what is the harm in including such a provision in the Bill and sending that message out to the international community as well as to the country?
On the circular economy amendment, in Committee I tabled an amendment calling for a reduction in resource use. In the interests of efficiency and time—and given that I was not getting many positive signals from the Government—I did not table it this time, but I think the Government will come back to this issue so that we can make at least some progress on it. Explicit support for a circular economy, which is a necessary but not a sufficient condition, given that we continue to treat the planet as a mine and a dumping ground, is essential in order to see some progress. We will certainly see the other place pushing on the question of resource use.
My Amendment 9 is a modest amendment, and it is perhaps worth making clear what I mean by it. I am very happy if the Government want to look at using different terminology, but I point out that what I mean by “roads” is major stretches of roadway. I do not mean tracks up to new onshore windfarms, government enthusiasm for which we are finally seeing signs of in the media, which is greatly encouraging. If the Government wish to find another form of wording, I point out that, clearly, what I am referring to is major road infrastructure. As the noble Lord, Lord Teverson, said, the climate emergency does not allow that. This issue crosses over with the clean air amendments in this group, and the issues of disadvantage that we are going to discuss in the next one. Broadly speaking, air quality is worst in the poorest, most disadvantaged areas of the country. New roads are the last thing those areas need, as they would make the air quality even worse.
To say that the Infrastructure Bank is not for roads but for mass transport should be considered uncontroversial. It is not my intention to put the amendment to a vote, but this is a debate that will continue in the other place. I commend all these amendments to your Lordships’ House.
My Lords, I rise to speak to Amendments 7 and 10 in my name, but before I do I join others in congratulating my noble friend the Minister on tabling the government amendment on energy efficiency. It speaks to an amendment that I and others tabled in Committee, and it is certainly welcome that it will now, rightly, be included in the Bill.
Amendment 7 would insert just three words: “nature-based solutions”. There is a lot in the Bill about climate and carbon, but the reality is, as noble Lords are well aware, whatever we do and must do on that front, we will still be left with a pressing, urgent need for nature-based solutions. As other noble Lords have mentioned, we have “roads” in the Bill. As the noble Baroness, Lady Bennett, has just pointed out, I do not think anybody would necessarily be against roads as a secondary, tertiary or lower-level aspect of an infrastructure project—to get to the shoreline for offshore wind, to give another example. However, that is at best a tertiary part of the bank’s investment, or of that particular infrastructure project, yet it is in the Bill. If “roads” can be there, surely “nature-based solutions” has at least an equal place in the Bill. Would my noble friend consider including “nature-based solutions” and, in exchange, taking “roads” out of the Bill? That would be a thoroughly good thing.
Finally, in similar terms, my Amendment 10 would insert “clean air”—perhaps one of the most significant, precious and essential parts of our infrastructure. Does my noble friend the Minister agree that it would not be difficult or controversial, and that it would be a thoroughly good thing, to have “clean air” on the face of our infrastructure bank Bill?
My Lords, the House this afternoon represents one of the Prime Minister’s favourite metaphors: a nest of singing birds. Everybody who has spoken agrees with each other; I agree with everything that has already been said, but particularly with what my noble friend Lady Hayman has said. I have added my name to her Amendment 1, and I will make just two additional points to the ones she made.
First, the Government agree that nature, nature recovery and nature-based solutions are important, and they say that all of that is encompassed within the Bill as drafted. But if nature is not mentioned on the face of the Bill, it will always look secondary; it will always nest behind climate. It will not have the same prominence or importance, yet all the facts suggest that the biodiversity crisis is at least as urgent as the climate crisis. These two things, according to the facts and the evidence, deserve to be side by side. If they are not, the bank and others will draw obvious conclusions.
Secondly, the only point I have heard made for why there is resistance to having nature on the face of the Bill is that there are not really any projects ready to go. My answer to that is: so what? This Bill is setting the course for the years ahead. It does not matter that there is not something ready to go in the next few months, because these projects will surely come. One issue that has detained your Lordships’ House time and again over the last year has been water quality and the fact that water companies are dumping sewage hundreds of thousands of times a year into our rivers and the sea. It is easy to imagine a project on water quality that would not really be about climate but would be all about nature. Surely that would deserve to be supported by the UK Infrastructure Bank. So I ask the Minister to reconsider one last time.
My Lords, first, I apologise for not attending the earlier stages of the Bill. I was caught out by conflicting diary commitments, but I have been following the debates and the developments around the Bill through all the stages, and my noble colleagues will know of my interest in this issue.
We have been grateful to the Minister for the continued dialogue on the contents of the Bill. However, as we heard today, there remains unfinished and unresolved business, and I am therefore grateful to the noble Baroness, Lady Hayman, and all noble Lords who set out the case for their amendments so clearly; we share their concerns. The number and range of amendments in this group on the environmental priorities demonstrate that there is a feeling across the House on this issue. The noble Lord, Lord McDonald, described it beautifully as a “nest of singing birds”. I concur with that description, because there is a concern that the ministerial responses in Committee simply have not been good enough to embed “nature-based solutions” and the “circular economy” into the bank’s founding legislation. However, we believe that these principles are crucial for the creation of green jobs, for harnessing the best science and technology, and for reshaping the economy away from the damaging fossil fuel mentality that exists at the current time.
Amendments 1 and 3 demonstrate our ongoing concerns about the implementation of the “biodiversity” and “natural capital” commitments of the Environment Act, which, as the noble Lord, Lord Teverson, quite rightly pointed out, were designed to underpin the very compelling evidence in the Dasgupta review. In that report, Dasgupta made it clear that enhancing nature and biodiversity are more than aspirational extras; they lie at the heart of our future economic and social well-being and are fundamental to delivering our climate change commitments. This is why we believe that these principles should be a major driver of the bank’s activities and spelled out in the Bill. As the noble Baroness, Lady Hayman, has made clear, the Chancellor’s strategic steer in March set out that the Government are already calling for the bank to grow natural capital markets through its investment. This Bill seems the proper vehicle to drive that policy through.
I have also added my name to Amendment 6A, which would make it clear that the definition of infrastructure projects should be widened to include “nature-based solutions”, rather than just concrete and metal. I also think that Amendment 9 of the noble Baroness, Lady Bennett, quite rightly challenges the emphasis on “roads”; surely public transport and green energy should be priorities in future. “Nature-based solutions” can be anything from creating natural flood defences to restoring our woodland, peatland and parks. The growing market for investment in nature-based land use is an illustration of its potential for delivering our climate change commitments.
The amendment also embeds the principle of the “circular economy”, putting greater emphasis on our scarce resources through better reuse, repair, recycling and remanufacturing. As noble Lords have said, these are principles to which the Government are already committed but have been slow to implement. Placing these in the Bill would provide the means for drawing in new revenue streams to transform our manufacturing processes. The noble Baroness, Lady Hayman, has already set out a convincing argument for Amendment 6A and—depending on the Minister’s response—if she wishes to test the opinion of the House, we will support her.
We also have our Amendment 11 in this group, which seeks to expand the definition of “harmful pollutants” to include those
“which are not greenhouse gases but”
other forms of “particulate matter”, such as car tyre air dust, which can be just as
“detrimental to air quality and human health.”
Therefore, we think that the case for expanding that definition is vital. I am grateful to the Minister for her discussion with my noble friend Lord Tunnicliffe on this issue, and hope that some of those assurances can be placed on the record today.
As is the case with so many other Bills, there seems to be a significant gap between what the Government say they want to achieve and what they are willing to commit to in legislation. Whether it is biodiversity, air quality, the circular economy or ensuring that infrastructure projects use nature-based solutions, their record of delivery does not match their stated ambitions. There always seems to be a political or legal excuse for delay. All we are doing in these amendments is formalising policy commitments already agreed by the Government, and providing a mechanism for financial support. There is already a review process built into this, but, if we are not rightly ambitious about delivering projects outside the normal investment portfolios, we will find ourselves in the seven-year review stage facing a tally of missed opportunities. This is why it is so important for noble Lords to support the amendments in this group, and I hope that they will.
My Lords, we start Report with a topic that has already been central to our discussion of the UK Infrastructure Bank: its role in investing in nature and the environment. I thank the noble Baroness, Lady Hayman, and all noble Lords who have engaged with the Government on this important topic.
I turn first to Amendments 1 and 3, in the names of the noble Baroness, Lady Hayman, and the noble Lord, Lord Teverson, which seek to add natural capital, biodiversity, wider environmental targets and climate adaptation to the bank’s climate change objective. As we discussed in Committee, nature-based solutions and projects to support climate adaptation are already within scope for the bank. Those who attended the briefing with the bank’s chief executive and chair last Tuesday will have heard that the bank is keen to explore this area. We have given thorough consideration to the question of adding to the bank’s objectives through our environmental review on whether nature-based solutions should be in the objectives. We engaged with a wide range of stakeholders during this review, from think tanks to investors, and we heard from a majority of them that they felt that there was already significant scope for intervention in nature-based solutions within the bank’s existing mandate without adding a third objective.
In considering this question it is important to acknowledge that the bank already has two stretching and broad objectives that are the outcome of significant work, starting from the recommendations of the National Infrastructure Commission and the national infrastructure strategy. Ultimately, the bank is an infrastructure bank, so it should invest in nature as a means of achieving its objectives and to enhance the UK’s infrastructure. The Chancellor made this clear to the bank when he sent it a strategic steer in March this year. The bank’s strategic plan sets out that it will explore opportunities to invest in nature and highlights opportunities to invest in water-related projects, as the noble Baroness, Lady Hayman, mentioned.
While the bank’s scope to invest in nature is already significant, it is important to note that this is not the only, or indeed primary, government intervention to support the market for natural capital projects. I will mention just a few areas. To provide an accredited route for income for nature projects, the Government are backing the maturation of the woodland carbon code and peatland code through the nature for climate fund and woodland carbon guarantee. To create demand for nature projects, we are implementing regulation to grow the market—for example, through mandating biodiversity net gain for development. The nature recovery Green Paper also sets out plans in this area, specifically on ensuring that environmental regulation and regulators, including Natural England, the Environment Agency and Ofwat, are equipped to support the uptake of nature-based solutions and more strategic, landscape-scale approaches to environmental protection and enhancement by industry. To help the market mature from grant support to a more commercial basis, Defra has established the natural environment investment readiness fund of up to £10 million, which will provide grants of up to £100,000 to environmental groups, local authorities, businesses and other organisations to help them to develop nature projects in England to a point where they can attract private investment. Defra is also initiating the big nature impact fund, a blended finance vehicle designed to use public concessionary capital to attract private capital into the fund. The fund will invest in a portfolio of natural capital projects that can generate revenue from ecosystem services to provide a return on investment. These initiatives will support the growth and commercialisation of the natural capital market.
I thank the noble Baroness, Lady Hayman, for her support for the government amendment in my name. I again reassure noble Lords that it was always the Government’s intention that the bank could invest in projects to increase energy efficiency—for example, the retrofitting of homes. In fact, this forms a key aspect of the bank’s strategic plan. However, recognising the points raised in debate on this, I have tabled this amendment to add “energy efficiency” to the non-exhaustive definition of infrastructure in Clause 2 to ensure that it is explicit that the bank can invest in projects to increase energy efficiency.
Amendments 6A, 7, 9, 10 and 11 all seek to make further changes to the definition of infrastructure in the Bill. Amendments 6A and 7 seek to add “nature-based solutions” to the definition of infrastructure. As noble Lords have already heard, the Government are confident and, through our review of the bank’s environmental objectives have sought third-party views to ensure, that the definition we have included covers nature-based solutions. The bank’s strategic plan also makes clear its commitment to supporting the development of a circular economy.
On Amendment 9 in the name of the noble Baroness, Lady Bennett, I hope she has received the letter from John Flint, the bank’s CEO, on this issue. As highlighted in the bank’s strategic plan, we do not anticipate the bank investing much in roads. However, it is important that it has the flexibility to do so under the right circumstances. The bank may, for example, consider supporting local authorities in road upgrades that feature as part of their wider transport infrastructure and transport decarbonisation plans. For example, the bank has already financed the West Midlands Combined Authority’s sprint bus programme, which includes road adaptations such as priority signalling, redesign of junctions and additional bus lanes.
I take this opportunity to comment on the bank’s investment in gas, which the noble Baroness, Lady Hayman, asked about. The bank will not lend or provide other support to projects involving extraction, production, transportation or refining of crude oil, natural gas or thermal coal, with very limited exemptions. These exemptions include projects improving efficiency, health and safety and environmental standards, without substantially increasing the lifetime of assets, for carbon capture and storage or carbon capture, usage and storage where projects will significantly reduce emissions over the lifetime of the asset, or those supporting the decommissioning of existing fossil fuel assets. The bank will not support any fossil fuel-fired power plants unless this is part of an integrated natural gas-fuelled CCS or CCUS generation asset.
Finally, I come to Amendments 10 and 11 tabled by my noble friend Lord Holmes and the noble Baroness, Lady Jones of Whitchurch. This is a difficult area to tackle, so let me set out how the bank considered the wider environment within its policy framework. First, there are investments which, while addressing climate change or growth, can help to improve the environment. Separately, there is a policy framework considering whether and the extent to which the bank’s investments impact environmental factors beyond climate change. With this in mind, I shall set out how the objectives of the bank relate to pollution.
The bank’s objectives are tackling climate change and regional and local economic growth, but not wider pollution. The bank can invest in projects that tackle pollution, but only so long as they also help to achieve its core objectives of tackling climate change or regional and local economic growth. Investments directly into infrastructure to tackle other pollutants that can impact clean air will already be broadly covered by the existing definition of infrastructure and the objectives in the Bill. For example, tyres would fall under transport, in the same way that water pollution is covered by water, and tackling those pollutants is in scope as long as that investment is also tackling climate change and/or facilitating regional and local economic growth. As we have discussed, there are likely to be large numbers of synergies in this area.
I know that there has been interest from Peers in broadening the bank’s definition of infrastructure to ensure that the bank takes into account the wider environmental impacts, beyond climate change, of its investment decisions. Widening the definition of infrastructure in this way is not the best way to achieve this. Instead, the way that wider environmental impacts are dealt with is via the bank’s environmental, social resilience and governance policy. The ESRG policy and framework that the bank is developing will be used to screen projects and provide transparency on its portfolio. Part of this policy will involve collecting data from each investment to meet reporting standards, such as the forthcoming sustainability disclosure requirements, which will include green taxonomy reporting. The objectives of the green taxonomy include pollution prevention and control, which the bank will need to report on for its investments.
More broadly, infrastructure projects are subject to a range of environmental regulations appropriate to their specific type and circumstances. It would not add value to apply these directly to the bank when they already bind the project developers directly. Defra is consulting on new legal targets for air quality, water, waste, and biodiversity, which the Government are required to set under the Environment Act by October this year and which noble Lords will be well aware of.
I hope, therefore, I have provided sufficient reassurance for the noble Baroness, Lady Hayman, to withdraw her Amendment 1 and for other noble Lords not to move the other amendments in this group when they are reached.
My Lords, I am extremely grateful to all noble Lords who have spoken in this debate. As in Committee, we saw support from all around the House. Unfortunately, the Minister has not completely reassured me. I am grateful for her reassurance on gas and understand the reason for including roads, with caveats, in the infrastructure. I sort of understand not wanting to change the objectives, because of the process she described with consultation and wanting to keep clarity for the two objectives.
What I cannot understand is refusing to include the circular economy and nature-based solutions in the infrastructure. I am afraid her arguments are undermined by the Government’s actions. They keep roads in there even though they need to be caveated and we need reassurances that they will not be a mainstream activity of the bank. However, they tell us that they are absolutely committed to making these an activity for the bank. We know that the Treasury, departments and everyone who talks about these issues understands the connection between nature-based solutions and climate change. They understand that we need to tackle these areas; there is no difference between us. These are not tablets of stone, unlike the objectives—and the Government are seeking the leave of the House to change the objectives on energy efficiency. If they can do it for energy efficiency, why cannot they do it for nature-based solutions and the circular economy?
I rest my case on that issue and will return to it when we come to Amendment 6A. I beg leave to withdraw Amendment 1.
Amendment 1 withdrawn.
2: Clause 2, page 1, line 13, leave out “and”
Member’s explanatory statement
This amendment seeks to probe whether the Bank would need to meet both objectives in the exercise of its activities.
My Lords, Amendment 2 is a probing amendment so I can be very brief. Its purpose is to seek clarity on how the objectives of the bank will work together and to allow the Minister to put that clarification on the record.
We have discussed this informally with the Minister and her officials, and I am grateful for the time they gave us. Our questions were about whether the two basic objectives—tackling climate change and supporting regional and local economic growth—both needed to be met in any project. Is that what “and” means here in the Bill? In her letter to us of last Tuesday, the Minister responded:
“I can confirm that the Bill’s drafting does not mean that a project must meet both those objectives. The Bank can invest in projects which meet only one of these objectives, so long as supporting a project to deliver regional and local economic growth does not do any significant harm against the Bank’s climate objective.”
As far as it goes, that is clear and helpful; I look forward to the Minister putting it on the record in a moment.
However, it raises a couple of other issues. For example, does it work the other way round? Is it permissible to invest in a project to support the bank’s climate objectives as long as it does no significant harm against the bank’s regional and local economic growth objective? I assume that this is the case—I would be grateful for confirmation that it is. What does “significant” mean in these contexts? What criteria will be used to provide a threshold test for significance? Will each project carry an assessment of the harm that pursuing only one objective may cause to the other? Will any such assessments be published along with other details of the project? I look forward to the Minister’s reply and the arrival of complete clarity.
My Lords, Amendment 5 is in my name. I declare my interest as a project director working for Atkins and note that I am co-chair of the Midlands Engine APPG. First, I thank my supporters on this amendment; I thank the right reverend Prelate the Bishop of St Albans for all his help in crafting it, and the noble Lord, Lord Tunnicliffe, for his support. My remarks are equally applicable to Amendment 12 in the name of the noble Lord, Lord Tunnicliffe, to which I have added my name.
To briefly reiterate the issue, the current levelling-up objective of the bank, set out in Clause 2, is not clear enough to articulate the levelling-up purpose of the bank in the Bill. Indeed, I would question what the words
“support local and regional economic growth”
really add to the Bill. Almost any conceivable infrastructure investment will meet this objective for the area in which it sits.
As the Minister has previously stated, we have the strategic steer in the form of a letter from the Chancellor, which clearly sets out levelling-up objectives. However, levelling up is a long-term, generational project—as is this bank—and the strategic steer will not bind it in the long term. Ultimately, if nothing is done because of the lack of clarity in the Bill, the bank and the Government may drift away from the levelling-up purpose expressed in the strategic steer and may not undertake the vital work of helping disadvantaged areas in the long term.
This is particularly the case because the effects of agglomeration work against infrastructure spend outside the metropolis. The economic return is simply much better in areas that already perform well, so those projects have a much better chance of proceeding. Inequality becomes entrenched and self-fulfilling. That is why it is so important that, for an infrastructure bank still focused on making a return, levelling-up objectives are clear in the Bill. This can be solved via the simple amendment we have set out. It takes on board feedback from the Minister in Committee to avoid any complicated definitions of disadvantaged areas. It does this by using similar comparative wording to a recent government amendment to the Subsidy Control Act. The amendment would mean that Clause 2(3)(b) read:
“to support regional and local economic growth, with an emphasis on reducing social or economic disadvantages within the United Kingdom.”
I am very grateful to the Minister and her team for meeting me and for their efforts in investigating this issue. I know that the Minister is concerned about legal challenge and whether the wording would cause the bank to be too cautious in its approach, but this wording captures the very fundamentals of levelling up. Given the guidance for the bank in the strategic steer, all its investments should be compliant with the wording in any case, so I do not believe that this would limit the bank in any way.
Amendment 12 provides the same clarity in a slightly different way, by ensuring that the first mission in the levelling-up White Paper—the key mission of relevance for the bank—is written into the bank’s objectives. Ultimately, both amendments address the same issue: we want to be confident that there is some permanence to the bank’s objectives on levelling up and focusing on disadvantaged areas. The strategic steer and a letter to the bank do not offer this permanence, so I hope the Government will agree that something needs to be done to ensure that the bank will deliver in the long term for disadvantaged areas, deliver for the levelling-up agenda and fulfil its potential to make a real difference to the lives of people in those left behind communities all across the country.
My Lords, it is a pleasure to follow the noble Lord, Lord Ravensdale. It was particularly useful that he spoke before me because I have taken some of the words that he and his supporters put down in their amendment but made an additional change, taking out the words “economic growth”. But I agree entirely with everything the noble Lord just said about the need to focus on reducing disparities and tackling economic and social disadvantages. As he said, that takes the wording from the Government’s own approach in another place and it would be very hard for the Government to argue against that.
I argued extensively in Committee about why economic growth as a target in its own right has failed and, indeed, is undeliverable, because you cannot have infinite growth on a finite planet. I will not go over those arguments again now, but I think it is very clear from the fact that we are back here again, after an extensive debate in Committee from all sides of your Lordships’ House, simply saying that the bank will work for regional and local growth. As was said in Committee, that could be regional and local growth in Chelsea and the wealthiest 10 wards in the whole country, which is surely not the purpose, and it therefore needs to be clarified in the Bill. As was said in our earlier debate when we were talking about the environment, we have seen acknowledgement of the need to change the Bill already. This is surely another crucial change.
I was pleased to attach my name to Amendment 12 in the name of the noble Lord, Lord Tunnicliffe, and backed by the noble Lord, Lord Ravensdale, and the noble Baroness, Lady Kramer. This is again putting levelling up in the Bill. It is what the Government say the Bill is for. Surely, it has to be specified in it.
My Lords, I am going to be exceedingly brief because so much has been said which I support. I want to make a couple of comments on Amendment 12 in the name of the noble Lord, Lord Tunnicliffe, and others, that I have been pleased to sign. I want to make a point that I think has not been hit on. It is really important because it signals to those who put together projects and then turn to the investment bank and look for resources and funding that they are going to have to meet tests such as improving productivity and making sure that they are delivering well-paid jobs.
Putting that in the Bill would take it away from being a passive measure by which the bank looks at and decides whether to support projects and moves it into the active category. Those who are going out and investing will look closely at whether they are delivering against those various tests. There is so much that is good in the various amendments within this group—I very much support my colleague on Amendment 2—but I particularly wanted to underscore the message-signalling that is deeply inherent in Amendment 12.
My Lords, I am grateful to all noble Lords who have spoken in this important debate. I am particularly grateful to the noble Baroness, Lady Bennett, the noble Lord, Lord Ravensdale, and the right reverend Prelate—who is not present—for their support in tabling Amendments 4 and 5. Those texts are similar in intent to my Amendment 12, and those colleagues made a powerful case for tightening up the bank’s second objective.
I thank the noble Baroness, Lady Kramer, who joined the noble Lord, Lord Ravensdale and the noble Baroness, Lady Bennett, in signing Amendment 12, which I shall turn to now. The Government say their absolute priority is to deliver their levelling-up agenda. Ministers say they will use every tool available to them to ensure left-behind communities can catch up economically, compared to London and the south-east. However, anybody reading the Bill would be hard-pressed to identify that intent. Yes, the bank should be operationally independent from government, but that does not mean it cannot support the levelling-up agenda in its day-to-day work.
Amendment 12 would, in essence, place the first mission from the Government’s recent Levelling Up White Paper in the Bill. The amendment would not prevent the bank from acting in a manner that deviates from that mission. It will be free to invest in climate-related schemes or projects in wealthier parts of the UK; that would remain the bank’s prerogative. However, the amendment would introduce a general requirement for the bank to have regard to the public interest in targeting funds in a manner that will improve productivity, jobs, pay and living standards.
The Government say they want to create good jobs, lift people’s pay and improve life chances. However, at the same time, Ministers are slashing the size of the Civil Service and washing their hands of responsibility for pay negotiations in sectors where the Government have a direct interest. We still await an employment Bill that has been promised for many years. That Bill was not deemed a big enough priority to be included in the Queen’s Speech, meaning many workers will lack important statutory rights.
The aforementioned White Paper mentions that by 2030, the Government want to see the gap between the best and worst performing regions of the UK narrowing. We want to see that gap close, too, but let us be realistic: it will require concerted action, not just warm words.
The year 2030 is not very far away. Let us consider the current economic context: the economy is on the brink of recession and is forecast to flatline in 2023. The cost of living crisis is squeezing household incomes to an extent not seen for decades. There is not a huge amount of time to turn this picture around. If we are to do so, we need urgent action to create secure, well-paid jobs, and the bank can help only if it is explicitly encouraged to do so.
Amendments to the framework document or strategic steer are not enough to target the bank’s mind or provide comfort that the Treasury is sufficiently invested in following through with its stated ambitions. It is regrettable that the Government have not brought forward their own amendment at this stage in proceedings. We have pushed for this in meetings with the Minister but have not succeeded.
We will listen carefully to the Minister’s response today but feel that this is an important issue which deserves to be in the Bill. Unless the noble Baroness is able to commit to an amendment at Third Reading, I am minded to test the opinion of the House when Amendment 12 is called.
My Lords, I will first take Amendment 2 from the noble Lord, Lord Sharkey, which, as he explained, seeks to probe our use of “and” in the activities of the bank to see whether it must meet both objectives or just one. As we discussed previously, the bank’s two objectives—to help tackle climate change and to support regional and local economic growth—are both stand-alone but complementary objectives. I can confirm that the Bill’s drafting does not mean that a project must meet both of those objectives but rather that over the breadth of its activities the bank must meet both.
The bank can invest in projects which meet only one of these objectives, so long as supporting a project to deliver regional and local economic growth does not do any significant harm against the bank’s climate objective. The bank wrote to noble Lords with further detail on the “do no significant harm” policy on Friday.
To address the noble Lord’s two specific questions, there is no reverse or equivalent “do no significant harm” policy for climate change investments with regard to local and regional economic growth. However, in reality we do not consider the bank likely to invest in something harmful to economic growth given the need to crowd in private capital and be additional, in line with its investment principles. The bank will create its own framework for assessing what “do no significant harm” means, drawing on best practice from around the world.
Amendments 4 and 5 from the noble Baroness, Lady Bennett, and the noble Lord, Lord Ravensdale, attempt to define levelling up within the local and economic growth objective of the bank. I reiterate why we have taken the approach that we have. The Bill sets the foundation on which the bank will operate. The specificity of how the bank’s objectives will be achieved will be contained in the framework document and in the strategic steer and strategic plan. This is the appropriate use of primary legislation, which can be a blunt and inflexible tool. Specificity in the Bill must be backed up with detailed and precise drafting, and a number of the aspects which we will discuss today are not easily defined. Failure to do this unnecessarily increases the risk of legal challenges which the bank will face, and that increased risk could result in the bank having a decreased risk appetite for investment.
That is why we have taken the approach we have done with the objectives. We have kept the high-level principles in legislation and supplemented those with additional information in the strategic steer and the framework document. The definition of local and regional economic growth is addressed in the first strategic steer, issued by the Chancellor in March, which stated that a focus on geographic inequality must be a priority for the bank. It also pointed to the Levelling Up White Paper to set out the missions with which the bank should align itself when considering investments. We could not do something like that in the Bill.
Future Governments and the bank are likely to want flexibility in determining areas of focus, and increased specificity in the Bill will reduce this flexibility. The objectives cannot be amended by secondary legislation. That is a deliberate choice, but it also means that we must be careful about what we put into something which cannot be changed easily.
On the amendment tabled by the noble Lord, Lord Ravensdale, although similar wording is used in the Subsidy Control Act, the contexts are very different. In that legislation, the use of the phrase is related to an exemption to a prohibition in a specific context where tight parameters are needed. However, here it is operating as a limit on the long-term and overarching functions of the bank and will impact on every project that it enters into. As a result, the risks that we have previously discussed, and which relate to the bank being excessively cautious in considering investments for fear of legal challenge given the subjective nature of the suggested drafting, are much higher.
Amendment 12, tabled by the noble Lord, Lord Tunnicliffe, focuses on improving productivity, pay, jobs, and living standards, and reducing geographical inequality. The effect of this amendment would be that every investment would need to have regard to these two areas. He has included the wording “have regard to”, but this will still have significant impacts on the bank. On improving jobs specifically, we understand the intention of the amendment and do not disagree with it. However, we are concerned that there may be consequences. It could again lead to the bank being overly cautious for fear of legal challenge. For example, it might be nervous to invest in a new technology because that would cause job losses regarding an older or outdated technology. By extending the range of objectives, we increase the risk of tension between those objectives and, therefore, the risk of legal challenges to the bank’s operations.
I assure the noble Lord that the bank’s early deals are already creating jobs across the UK. For example, a deal with the West Midlands Combined Authority, which invested in a project that will increase connectivity between residential and employment areas by setting up a green bus route, is projected to unlock nearly 4,000 jobs. The strategic steer is also the right place to provide specificity about jobs or employment to meet the current needs of the country. Here, government can be more specific about quality, location and types of role.
Similar to the amendments tabled by the noble Lord, Lord Ravensdale, and the noble Baroness, Lady Bennett, a requirement on reducing regional inequality would mean that the bank has increased risk across a number of its investments. However, this amendment has the added risk of applying to its functions generally, not just to the regional and local economic growth objective. For example, what would happen if a future Labour Government wanted to use the strategic steer to allow the bank to focus on green jobs? What if the green jobs did not offer significant productivity increases in the same way as another investment, or if those green jobs were focused in a poor area of the south-east of England? There is a risk that, under the drafting of the amendment tabled by the noble Lord, Lord Tunnicliffe, the bank would be unable to focus on green jobs—or would at least be cautious about focusing on green jobs—given the read-across from the legislation. However, I understand the points being made in the debate today and commit to updating the framework document to ensure that there is wording which is consistent with the strategic steer and levelling-up White Paper. The wording here is:
“Addressing the deep spatial disparities across and within UK regions”,
which I hope that noble Lords agree captures what we are trying to achieve.
I hope that this goes some way towards addressing the concerns of noble Lords, although it does not seek to make changes to the Bill. I hope that the noble Lord, Lord Sharkey, can withdraw his amendment and that other noble Lords do not move theirs.
Amendment 2 withdrawn.
Amendments 3 to 5 not moved.
6: Clause 2, page 1, line 22, at end insert—
“(4A) Before making any investment decision, the Bank must ensure that the principle of additionality is met.(4B) The principle of additionality is that—(a) all activities make a contribution which is beyond what is available or is otherwise absent from the market,(b) all activities do not crowd out the private sector, and(c) all activities have effects that encourage private sector funding to a multiple specified by regulations made by the Treasury.”
My Lords, it is a pleasure to open this group of amendments and to move my Amendment 6. This amendment boils down to just one word, which predates the investment principles of the bank, the objectives of the bank, the strategy of the bank, the framework document of the bank and everything else associated with the bank: additionality. That is the bank’s raison d'être—no additionality, no bank.
As mentioned in the first group of amendments, we have “roads” in the Bill but nothing about additionality. My Amendment 6 would seek to set out exactly what additionality means, how it covers crowding out as well as crowding in, and what multiple Treasury should set on that crowding in.
Government Amendment 23 is purely an amendment to review what the bank has done on crowding in after seven years. It says nothing on crowding out, hence why I support Amendment 24 in the name of my noble friend Lady Noakes, which I will say no more about.
My Amendment 6 covers both the end-point—the review—and the beginning, the mission the bank needs to be on. It is all well and good to have a review at the end of 10 years, or now seven, but without Amendment 6 the review is just the spectre of an individual walking backwards into the future, wringing hands about what the bank has done, either positively in achieving additionality or negatively. Although a review is significant and important, it always arrives a little too late to influence what has just happened.
It is critical that additionality is in the Bill for the benefit of the bank and for the private sector, which would have the confidence to know that the bank would operate to the threshold of additionality, which would have to be achieved or that specific investment would not be entered into. If the Minister cannot accept my amendment, would she commit to meeting with me between Report and Third Reading to look at what we can do to get additionality in the Bill to strengthen the position of the bank, to make projects far more likely to crowd in and not crowd out funding and, ultimately, to benefit everything we are trying to do in this infrastructure space? I beg to move.
My Lords, I have Amendment 24 in this group, which is an amendment to the Minister’s Amendment 23. It is always rather strange speaking to an amendment to an amendment when the amendment itself has not been spoken to—but I will do my best.
First, I congratulate my noble friend Lord Holmes of Richmond on his Amendment 6. It is well drafted and encompasses what we understand by additionality in the context of the operations of the UKIB. In Committee, it was widely agreed that additionality was so important that it should be in the Bill. I think it was also agreed that the boundary between what is in this Bill and is in other documents outside the Bill, including the framework document which is not even referred to in the Bill, has been set in the wrong place. When I say that the Committee agreed these things, I do not suggest that the Government agreed, but the vast majority of the Committee was aligned on these matters.
The Minister has been generous with her time with noble Lords, and I thank her for the meetings she arranged and for her letter of last week. She gets a gold star for effort, but I am afraid that that is not matched for content. On additionality, my noble friend claimed that the absence of an agreed definition in the Bill could stop it developing over time. That is nonsense. Additionality, as a basic concept, has barely shifted in the many years that I have been involved in public sector matters. The essence of it is about, and always has been about, something that should occur that would not otherwise have occurred but for the particular intervention or action. It is a universal principle that can be adapted to a number of circumstances.
I then suggested to my noble friend the Minister that, rather than try to produce a specific definition, she could put a high-level definition in the Bill and take a Treasury power to issue guidance to UKIB. That too was brushed aside. The Treasury likes to keep stuff in documents, such as the framework document, which it alone controls. I remind noble Lords that, as my noble friend the Minister informed us in Committee, the framework document is not even legally binding.
Nevertheless, I recognised that the Treasury is something of an immovable object on this issue, so I decided that it would be better to pursue the Minister’s offer of a way forward and include additionality issues in the periodic reports which are required by Clause 9. I thought that half a loaf would be better than no loaf, but I have to say that Amendment 23, which my noble friend has tabled, is a serious disappointment. It represents no more than a quarter of a loaf.
Amendment 23 adds an additional reporting requirement to Clause 9 but it is a lop-sided approach to additionality. Its focus is on the extent to which UKIB’s investments in projects have encouraged additional investments in those projects. It therefore will cover the extent to which projects have enabled crowding in, but it does not explicitly cover crowding out, which has always been my biggest concern, because a bank with a high capital ratio and a low cost of capital can easily outcompete private sector financing. I do not believe that if UKIB were to finance the whole of a transaction to the complete exclusion of the private sector in circumstances where 100% private finance could have been obtained, it would be captured by my noble friend’s amendment—it would not come close to being captured by my noble friend’s amendment. Such a transaction would not have encouraged or discouraged private sector finance; it would have bypassed it completely. That is why my Amendment 24 refers to investments having been made by UKIB
“despite an adequate supply of private sector financing”.
My noble friend the Minister will doubtless say that it is not in UKIB’s strategic plan to do transactions without private sector financing. It was never in the strategic plans of the European Investment Bank to crowd out private sector financing, but it did it anyway, in collusion with private sector borrowers, who were quite happy to take soft loans from public sector lenders who were much easier to deal with than hard-nosed real bankers in real banks.
My noble friend the Minister has also referred in correspondence to the impact of the Subsidy Control Act, which became law earlier this year. I have to say that the Act, which refers to subsidy decisions, sits rather uneasily with the practice of doing investment deals in the context of a bank. I accept that at a high level it would apply to UKIB. I just think that the language is very difficult to interpret in the context of what UKIB would do. My main concern is that there would never be an enforcement action against UKIB because the crowded-out private sector financiers are exactly the same people who want to be invited to any crowding-in party. It simply will not be in their interest to try to get the Act enforced against UKIB.
For all these reasons, I am very disappointed that this Bill, which I have never regarded as a shining example of Conservative economic values in any event, is going to ignore the concept of crowding out, which ought to be something dear to any Conservative Government’s heart. I shall not move my amendment when we reach it in the Marshalled List, but I live in hope that there are still some Conservatives in the Treasury who might have a change of heart before this Bill reaches the other place.
My Lords, I rise to speak to Amendment 24 in the name of the noble Baroness, Lady Noakes, to which I have added my name. The noble Baroness has already eloquently explained the rationale for this amendment, so I will try to keep my speech reasonably short.
Like the noble Baroness, I was strongly drawn to Amendment 6 in the name of the noble Lord, Lord Holmes, which would insert the critical additionality principle into the principles of the Bill. That would be the preferable approach, but, like the noble Baroness, Lady Noakes, I have been persuaded, reluctantly, to go along with the Government’s approach of making this something the bank reports on.
That leads me to amendments in the final group about the timing of those reports, which are, at the moment, seven years apart. If this is to be the way we deal with additionality, the report timings need to be shorter.
I thank the Minister for her engagement during this process. It has been exemplary. I thank her for listening and I am pleased that she has introduced the principle of additionality, albeit into the review process, by amending Clause 9 with Amendment 23. However, I share the disappointment of the noble Baroness, Lady Noakes, with that amendment and, in particular, the way in which it fails to deal with crowding out. It deals with the additionality element, but it does not deal with the crowding-out element.
If noble Lords will forgive me, I will touch on why crowding out is important, because I am not sure it is widely understood. It sounds like a technical economic term, but it is not; it is a very practical and important issue. Crowding out happens when the Government, in this case through the bank, invest in direct competition with the private sector by offering lower interest rates or better terms generally. This is something, as the noble Baroness, Lady Noakes, has said, that the Government have rightly criticised the EIB for doing in some circumstance. I think the EIB got some things right and was quite good in certain circumstances, but there are also plenty of examples where it crowded out.
First, crowding out is a waste of taxpayers’ money—why should the taxpayer, in effect, subsidise a project that could perfectly well be financed by the private sector? More damaging still is the effect that crowding out has in actively discouraging the development of a thriving private sector financing market for the sorts of investments in infrastructure and the environment that the bank is meant to encourage. Why would a private sector financier bother to create an infrastructure financing business if it will simply be undercut by the Government’s investment arm? So the impact of crowding out is to reduce the longer-term availability of private sector finance, and it may end up actually reducing the level of infrastructure and environmental investment over the longer term, which is precisely the opposite of what we are trying to achieve with the infrastructure bank. That is why it is so important that the bank does not crowd out private finance.
Amendment 24 is designed to ensure that those situations where crowding out occurs are explicitly reported on, rather than just ignored. The Minister said in her letter of 30 June that
“given that review will cover crowding-in, that necessarily includes the question of whether crowding-in did not happen with the attendant risk of crowding-out. This is because additionality is designed to measure genuine additional private finance, in other words investment that would not otherwise have happened ... I would fully expect the independent review to address the question of crowding-out under the terms of this drafting.”
However, let us look at the drafting of Amendment 23: it simply does not do that. It requires the review to report only on
“the extent to which its investments in particular projects or types of project have encouraged additional investment”.
It does not refer to situations where the bank has replaced private finance, in whole or in part. Indeed, in the slightly odd situation where it replaced private sector finance only in part—for example, by taking 50% of an investment—as drafted, the bank would be able to measure the other 50% as additionality, even though it would have happened anyway. A project where 100% is replaced by private finance would simply be treated as not crowding in. There is nothing in Amendment 23 that would mean it would be the actual crowding out would be measured or reported on.
Given the importance of the bank not crowding out the private sector, which, as I have explained, would potentially undermine the bank’s very purpose of encouraging infrastructure and environmental investment, the Government should look very closely at accepting an amendment like Amendment 24. At the very least, could the Minister please be explicit at the Dispatch Box—rather than implicit, as she was in her letter—that her Amendment 23 is intended to ensure that the review is intended to cover, and will actually report on, those situations where the bank invests despite there being private finance available for the investment? That wording is really important, and her letter is not explicit on that point.
My Lords, it was not my intention to speak on this group but, given that all the non-government speakers have been from the other side of the House, I felt I should offer an argument from this side of the House that is perhaps 180 degrees opposite to that presented by the noble Baroness, Lady Noakes, but, none the less, makes an argument for either Amendment 6 or Amendment 24.
The noble Baroness, Lady Noakes, suggested that she preferred private bankers to public bankers. Private bankers have been left to provide the direction for our economy and society over the past few decades and look where that has got us: we are having to talk from all sides of the House about the urgent need to level up and to tackle poverty, inequality, our climate emergency and the nature crisis. Therefore, we need to make sure that the bank is not crowding out private finance. If it is, it is spending money in the wrong places. It needs to be doing things that are innovative and different from what we have been doing up to now. That is why I encourage either the mover of Amendment 6 or those speaking to Amendment 24 to consider testing the opinion of House, and I offer them Green support.
My Lords, my motivation here is somewhat different: I want to see the bank move along the risk spectrum. There is a temptation, due to the structure of the bank, for it to stay within the range of fairly safe investments. It has to produce a return and it has a very small risk capital base, but I would like it to maximise that to move along the risk spectrum. I see no other way to accelerate the innovative technologies that we need, or development in disadvantaged areas where people have typically turned their backs, unless the bank is willing to take on that much higher risk profile. The various additionality amendments seem to create that kind of pressure to move UKIB much further down the risk spectrum than it might otherwise feel comfortable in doing, meaning that it therefore does not maximise the opportunities in front of it.
My Lords, I join my noble friend Lady Noakes in applauding Amendment 6 in the name of my noble friend Lord Holmes as a gallant attempt at defining additionality, although I dare say another Peer might draft it differently.
I want to make a more general point about additionality before coming on to the specifics of each amendment in this group. Additionality is a key principle underpinning the bank, and it is something that the Government take very seriously. That is demonstrated by the fact that additionality is one of the bank’s core investment principles, as set out in its framework document and strategic plan. However, following legal advice, the principle is not included in the Bill as there is no single agreed definition of additionality in a financial context that we could appropriately include in the Bill. Approaches to assessing additionality are developing over time and we would not want to stymie that development by creating a statutory definition of additionality at this stage.
While the term “additionality” has been included in previous legislation—for example, the Dormant Assets Act 2022 and the National Lottery Act 2006—additionality in those contexts had a different meaning: of funding projects or activities that the Government would not have otherwise funded. Assessing private sector additionality is more complex because it involves more actors and varied forms of financing. Each deal will have a particular set of circumstances that will indicate the amount of additionality that the bank is bringing. For the bank, as part of that, additionality means ensuring that it both crowds in private finance through its investments and avoids crowding out the market by providing finance that could have come from the private sector.
The bank has set out its approach to assessing and measuring these concepts of additionality in its strategic plan, which was published at the end of June. Currently the bank will assess additionality on a case-by-case basis, assessing the evidence as part of due diligence and monitoring that through a key performance indicator on the levels of private sector finance that it has crowded in. This is a measure commonly used by other organisations such as the OECD.
Crowding out is best assessed through evaluations and medium-term assessments of whether the portfolio of investments has led to crowding out in a particular sector. The bank is developing its thinking on how it will monitor and evaluate its work at both deal and portfolio level, including setting up an independent evaluation.
Further to this, additionality is implicitly covered in the Subsidy Control Act 2022, which of course applies to any subsidies the bank gives. Schedule 1D states:
“Subsidies should not normally compensate for the costs the beneficiary would have funded in the absence of any subsidy.”
Given the protections of the Subsidy Control Act 2022 and the regulatory regime, the difficulty in accurately defining additionality in the Bill, the work the bank is already doing on additionality and, finally, our amendment to the review, I hope my noble friend Lord Holmes will feel able to withdraw his amendment. I must say to my noble friend that the Government do not intend to bring forward any amendments at Third Reading, so I must disappoint him on that front. I should also say that to the noble Lord, Lord Tunnicliffe, in relation to the previous group, if I was not clear on that front.
The amendment in my name to Clause 9, on the statutory review, will ensure that the review of the bank will measure its success in encouraging additional investment. The drafting of the amendment is based on the reference to additionality in the framework document. I should like to provide reassurance that, given that the review will cover crowding in, it necessarily includes the question of whether crowding in did not happen, with the attendant risk of crowding out. This is because additionality is designed to measure genuine additional private finance—in other words, investment that would not have happened otherwise. I would fully expect the independent review to address the question of crowding out under the terms of this drafting.
The bank could act as the sole financer of a private project if it meets the bank’s investment principles and objectives, but it is highly unlikely that the bank, as the sole financer of a private project, would crowd out private investment, as the bank would be the sole investor in very immature or nascent financial markets for a technology only if no other investors were willing to support the project.
The bank’s initial assessment of the technologies, sectors and markets it plans to engage in, as published in its strategic plan, will allow it to focus its investment in areas with a limited risk of crowding out. This will continue to be developed and reviewed. In cases where the bank would act as the sole financer of a private project, it would expect to have a transformational impact on the market and for the market to be able to attract private capital over the medium to long term. This in part speaks to the concern of the noble Baroness, Lady Kramer, about the bank being able to operate along the risk spectrum, as it were, rather than seeking to invest solely in perhaps lower-risk or less innovative projects, given the other demands that it has: making a return on its investments and becoming self-funding.
Given this, I am grateful to my noble friend for her commitment not to move her amendment when it is reached. I hope that, in future, my best efforts produce more than a quarter of a loaf.
My Lords, I thank all noble Lords who have spoken on this group, and particularly my noble friend Lady Noakes for bringing forward Amendment 24. I shall summarise what the Minister said: that additionality is pretty much impossible to define, but the bank will definitely do it—so that is good. It is unfortunate that we cannot have that in the drafting of the Bill given that, as I said in opening the group, this is the raison d’être of the bank: its only ultimate purpose is additionality. As other noble Lords have said, not having this could lead to less rather than more, and taxpayers’ money being put to that purpose.
It is desperately disappointing that we cannot have additionality in the Bill. I will withdraw my amendment but, in doing so, I gently, politely and respectfully request that my noble friend the Minister considers not moving government Amendment 23 and working to meld it with my noble friend’s Amendment 24 to come up with something that actually covers both crowding out and crowding in. Certainly, as drafted, government Amendment 23 does not do this. I beg leave to withdraw Amendment 6.
Amendment 6 withdrawn.
6A: Clause 2, page 1, line 23, after “includes” insert “structures underpinning the circular economy, and nature-based solutions,”
My Lords, in the earlier debate on this amendment, we heard very powerful arguments for including nature-based solutions and the circular economy in the definition of “infrastructure” in the Bill. The arguments that we heard from the Front Bench were not as strong: the principle was accepted, and we were asked to accept the reassurance that these issues could be included because they were in the framework document or the strategic plan. This is Parliament’s opportunity to say what its priorities are. I believe that there is support for this around the House, and I beg leave to test the opinion of the House.
Amendment 7 not moved.
8: Clause 2, page 1, line 25, after “heat” insert “and, in relation to electricity, gas and the provision of heat, energy efficiency”
Member's explanatory statement
This amendment would make it clear that energy efficiency, in relation to electricity, gas and the provision of heat, is within the definition of infrastructure.
Amendment 8 agreed.
Amendments 9 to 11 not moved.
12: Clause 2, page 2, line 4, at end insert—
“(5A) In exercising its functions, the Bank must have regard to the public interest in targeting investment in a manner that—(a) improves productivity, pay, jobs and living standards, and(b) reduces economic disparities between the nations and regions of the United Kingdom.”Member's explanatory statement
This amendment would ensure the Bank has regard to the first mission of the Government’s Levelling Up White Paper when exercising its functions under this Bill.
13: Clause 2, page 2, line 9, leave out subsection (7) and insert—
“(7) Regulations made under the powers set out in subsection (6) are subject to the “super affirmative procedure” as set out in subsections (8) to (15).(8) The Secretary of State must lay before Parliament—(a) a draft of the regulations, and(b) a document which explains the draft regulations.(9) Where a draft of the regulations is laid before Parliament under subsection (8), no statutory instrument containing the regulations may be laid before Parliament until after the expiry of the 30-day period.(10) The Secretary of State must request a committee of either House of Parliament whose remit includes infrastructure, economic growth, finance or climate change to report on the draft regulations within the 30-day period.(11) In preparing a draft statutory instrument containing the regulations, the Secretary of State must take account of—(a) any representations,(b) any resolution of either House of Parliament, and(c) any recommendations of a committee under subsection (10) made within the 30-day period with regard to the draft regulations.(12) If, after the 30-day period, the Secretary of State wishes to make regulations in the terms of the draft or a revised draft, he or she must lay before Parliament a statement—(a) stating whether any representations, resolutions or recommendations were made under subsection (11); (b) giving details of any representations, resolutions or recommendations so made; and(c) explaining any changes made in any revised draft of the regulations.(13) The Secretary of State may make a statutory instrument containing the regulations (whether or not revised) if, after the laying of the statement required under subsection (12), a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.(14) In this section, references to “the 30-day period” in relation to any draft regulations is to the period of 30 days beginning with the day on which the original draft regulations were laid before Parliament.(15) For the purposes of subsection (14) no account is to be taken of any time during which Parliament is dissolved or prorogued or during which either House is adjourned for more than four days.”Member's explanatory statement
This amendment seeks to provide Parliament with the opportunity for enhanced scrutiny of the regulations made under this section.
My Lords, I shall speak also to Amendment 18. I am very grateful to the noble Lord, Lord Vaux, and my noble friend Lady Kramer for adding their names to both amendments and to the noble Lord, Lord Tunnicliffe, for adding his name to Amendment 18.
The Bill contains Henry VIII powers in Clause 2(6)(a) and (b). These powers would enable the Treasury to amend the activities of the bank and change the definition of infrastructure by regulations subject to the affirmative procedure. There is no constraint, the Treasury has carte blanche: it can add to, subtract from or modify any or all of the bank’s listed activities; it can change what counts as infrastructure by adding, subtracting or modifying. This would enable fundamental changes to be made to the bank’s operations without any meaningful parliamentary scrutiny. The Government have previously asserted, and may do so again today, that the affirmative procedure for SIs constitutes meaningful parliamentary scrutiny, but this is obviously not the case.
In its 2018 report, the Constitution Committee noted:
“Without a genuine risk of defeat, and no amendment possible, Parliament is doing little more than rubber-stamping the Government’s secondary legislation. This is constitutionally unacceptable.”
But there is a way of enhancing scrutiny of secondary legislation. This is the super-affirmative procedure, and our Amendment 13 would replace the affirmative procedure with this super-affirmative procedure. Erskine May, in Part 4, chapter 31.14, characterises this procedure as follows:
“The super-affirmative procedure provides both Houses with opportunities to comment on proposals for secondary legislation and to recommend amendments before orders for affirmative approval are brought forward in their final form … the power to amend the proposed instrument remains with the Minister: the two Houses and their committees can only recommend changes, not make them.”
During the passage of the recent Medicines and Medical Devices Act, the Minister, the noble Baroness, Lady Penn, very helpfully summarised the super-affirmative procedure as follows, saying
“that procedure would require an initial draft of the regulations to be laid before Parliament alongside an explanatory statement and that a committee must be convened to report on those draft regulations within 30 days of publication. Only after a minimum of 30 days following the publication of the initial draft regulations may the Secretary of State lay regulations, accompanied by a further published statement on any changes to the regulations. They must then be debated as normal in both Houses and approved by resolution.”—[Official Report, 19/10/20; col. GC 376.]
It was in that Bill that the House last voted to insert the super-affirmative procedure. There was widespread support from across the House—from Labour, from these Benches, from the Cross Benches and even from two extremely distinguished Conservative Peers. Prior to that, according to the Library, the last recorded insertion was by the Government themselves in October 2017 in what became the Financial Guidance and Claims Act.
When they are not doing it themselves, the Government traditionally put forward any or all of three routine objections to the use of the super-affirmative procedure. The first is that it is unnecessary because the use of the affirmative procedure provides sufficient parliamentary scrutiny. This is obviously untrue. The second routine objection is that the super-affirmative procedure is cumbersome. I take this to mean only that this procedure is more elaborate than the affirmative procedure; which is, of course, the whole point. It is necessarily more elaborate because it provides for actual scrutiny where the affirmative procedure does not. The third routine objection is that it all takes too long. This has force only if there is some imminent deadline, and there is none in this case.
In Committee, the noble Viscount, Lord Younger of Leckie, argued in favour of retaining the Henry VIII powers in Clause 2:
“There may, however, be instances where we need to update the definition of infrastructure or the bank’s functions to ensure that the bank can continue to fulfil its objectives as a long-lasting institution.”
He went on to give an example:
“New green infrastructure technologies may emerge in the future which we would want … to include in the bank’s definition of infrastructure, to signal to the bank and the market that the bank can invest in these technologies.”—[Official Report, 14/6/22; col. 1541.]
I am afraid that this is a very weak argument. The definitions of “infrastructure” in the Bill are not exhaustive, as the Minister has again said this afternoon. The bank could simply decide that it wanted to include new green technology and say so in an official press release. In any case, the Treasury could always direct the bank to include these new technologies and any such direction would be published. As things stand, the Henry VIII powers would enable the Minister to change both the bank’s activities and the definitions of infrastructure without constraint or meaningful parliamentary scrutiny. Our Amendment 13 would restore an element of parliamentary scrutiny; Parliament should not be bypassed.
Amendment 18 addresses the issue of transparency over aspects of the Treasury’s relationship with the bank, including operational independence. The relationship between the Treasury and the bank is in large measure set out in the framework document. It is not entirely clear what the legal status of this document is, and there are inconsistencies between it and the Bill. We will discuss those later when we talk about the need to revisit the framework document and align it with the Bill, but I will examine just one section of the document.
Section 15 is entitled:
“Resolution of disputes between the Company and the Shareholder”.
The company is the bank and the shareholder is the Treasury. Paragraph 15.2 sets out a fairly standard procedure for trying to arrive at an agreed resolution of a dispute. Paragraphs 15.3 and 15.4 set out what happens if the resolution process is unsuccessful. Under the terms of these paragraphs, the Treasury may give the board of the bank directions of a specific or general nature.
If the board and the accounting officer reasonably believe that a given direction would conflict with a set of prescribed items, the board may issue a reservation notice in writing to the Treasury in respect of a direction that in its opinion would:
“infringe the requirements of propriety or regularity … not represent good value for money for the Exchequer as a whole … be of questionable feasibility or … unethical … be contrary to the Strategic Objectives ... result in the directors of the Company being in breach of their legal duties … and/or … not be in the best interests of the Company for any other material and demonstrable reason.”
The Treasury may nevertheless instruct the bank to comply with the direction. If that happens, the bank must seek a written instruction to undertake the actions set out in the direction. This written instruction is called a written direction; there is an oral equivalent, called an oral direction. The bank then has to follow the written direction. It is also required to tell a list of people what has happened and to arrange for the existence of the written and oral directions to be published. However, there is a caveat. The existence of the written or oral direction may not be published if the Treasury has directed the board in writing not to do so.
There are several things wrong with all this. First, there is no mention of publishing the reservation notice in the framework document at all. In her letter to us of 25 June, the Minister said:
“we have committed to update the Framework Document to clarify this position to reflect that the Bank may publish its Reservation Notice.”
Why “may” and not “must”? After all, the Bill specifies that the Treasury must publish any direction.
The second thing wrong is that the framework document explicitly requires the bank to
“arrange for the existence of the Written Direction or any Oral Direction … to be published”.
That is, unless the Treasury tells it not to. Why the odd language about publishing the “existence” of the written or oral directives? In plain English, that is not a requirement to publish the contents, but only the existence of the written or oral directives. That clearly cannot be right.
The third thing wrong is the Treasury’s power, set out clearly in the framework document, to gag the bank by directing it not to reveal the existence of a written or oral directive. The whole chain of events must be transparent at every point. If operational independence is to have any real meaning, the bank and the Treasury must publish not only the original directive but also any reservation notice and any written or oral direction.
That is what Amendment 18 would do. It simply amends Clause 4(3)(b) to read that the Treasury must publish a direction and
“any subsequent, consequential or relevant correspondence between the Treasury and the Bank.”
That means it must publish the content of such correspondence, not just the fact of its existence. I beg to move Amendment 13.
My Lords, I will speak to two sets of amendments. Before doing so, I thank the noble Lords, Lord Vaux and Lord Wigley, and the noble Baroness, Lady Kramer, for their support in the drafting of the amendments and for co-signing them. They fall into two distinct categories.
The first group, Amendments 14 to 17, relates to Clause 3. They are intended solely to deal with the framework document, about which we have had many discussions today and on various occasions. There is one in existence, but it is now more than a year old. That document needs to be brought in line with the other governing documents of the bank. It seems clear that, if you are to govern a bank properly, effectively and efficiently, its governing documents must be got right.
One of the problems with the framework document is that it is not clear what it is. Is it a very mundane document—I hate to use the word, but I think it is right—that deals with ordinary day-to-day activities or a much more important document, as the Minister suggested earlier in the debate, which might be used to fine-tune the way the bank will work or the objectives it is to be set?
Is it legally binding? Without seeing the document that will operate in the course of the bank’s governance, it is quite impossible to say, unless there is a clause which says that it is not legally binding. If it is not legally binding, unless it deals with day-to-day matters such as meetings, there may be no problem, but which is it?
Is it consistent with the Bill and the clauses that will be inserted into the strategic priorities? The present document is quite clear; it contains provisions that are redundant, such as those relating to the objectives and the appointment of directors, because they have been overtaken. The purpose of this amendment is to press the Government to be clear about what may or may not be an important part of the governance of the bank. I intend to say no more about that group of amendments.
Amendment 21 is a much more important amendment and goes to a constitutional point. Economic development is a devolved issue. It is not a straightforward one, because the government Acts of Scotland, Wales and Northern Ireland contain extensive reservations on aspects of economic development, as one would expect. One would expect that, ordinarily, the Governments of the devolved constituent parts of the United Kingdom and the Government of the United Kingdom would work closely together on so important an institution as the UK Infrastructure Bank. The Bill ought to reflect a properly organised structure, so that there is consultation and the views expressed by the devolved Governments are taken into account on consultation.
It is useful to look to Germany. KfW has one of the most successful track records in the world on the operation of an investment bank; 80% of it is owned by the federal Government and 20% by the Länder. It therefore has an institutional structure.
In the UK—I do not make any point about what has been decided—this is 100% owned by HM Treasury. Given the need for co-operation, particularly with the Welsh development bank and the equivalent development bank in Scotland, we ought to be clearer in the Bill that there should be appropriate consultation on its key features. I accept that the strategic plan put forward by the bank makes some mention of working in co-operation. Indeed, it mentions Wales or the Welsh six times, and Scotland gets a bit more as it is mentioned eight times, but Northern Ireland gets a bit less as it is mentioned only twice. But when one looks at the analysis of what is there, there is nothing of any real substance on which the Governments of the devolved constituent parts of the United Kingdom can get any comfort.
The Bill needs a legislative consent Motion. Another important feature is that we ought to recall the Sewel convention; we ought to be concerned at the number of instances where there is no consent. We are gradually moving away from the concept of “not normally” legislating the areas of devolved matters without the consent of the devolved legislatures. In this area, that is a very important point. Therefore, this amendment is put forward to provide a mechanism for consultation on three critical areas, and this inclusion should check and institutionalise in the Bill a structure for proper consultation in relation to the three most important functions of the Government on it: the ability to amend by regulation; the ability to appoint directors; and the creation of the statement of strategic priorities.
Given the current circumstances—and the real need to hold the union together—I hope that this amendment could be one which the Government would readily accept. Consultation is not going very far. One could put forward a clause which went much further, and I very much hope that the Government will look favourably on this proposed new clause, but I shall listen carefully to what the Minister has to say and, in light of that, consider whether I would seek to test the opinion of the House on this provision.
My Lords, I have been in your Lordships’ House since 2005 and one of the things that has always surprised me, having come from another part of the Commonwealth, is the way in which secondary legislation—statutory instruments and regulations—has grown like Topsy. Secretary of States are always accountable to Parliament and, if you give power away, some people never want it to be brought back. The Bill is an innovation. The noble Baroness, Lady Kramer, was right that we do not want to simply put things back into the systems of other banks, and this is a risky bank. It will go into areas where hitherto nobody has gone.
I speak only to Amendment 13, which seeks to provide Parliament with the opportunity for enhanced scrutiny of the regulations made under this section. That is all it is doing: Parliament must not just pass a law and allow the Secretary of State the power to make regulations and statutory instruments which then cannot be clearly watched. I have always believed that good law is good law—no one should be frightened of any good law. Therefore, the Secretary of State must not see this affirmative action as a hindrance of their function and their work. No, it is simply enhancing the scrutiny of regulations made under this section. I urge those who tabled this wonderful amendment to stick with it and not just give it away.
My Lords, I have added my name to all the amendments in this group, which cover four separate topics, and I will touch on each of them briefly. First, Amendment 13, which the noble Lord, Lord Sharkey, eloquently explained, aims to introduce a greater level of scrutiny to the use of the Henry VIII power that is included in the Bill. The activities and, in particular, the definition of infrastructure are fundamental to what the bank can do and how it will be measured. It must be right that changes to this are subject to a meaningful level of parliamentary scrutiny and, as the noble Lord clearly explained, the affirmative procedure has sadly become a bit of a sham. Amendment 13 seeks to find an interesting balance between the rubber-stamping of a statutory instrument and full use of primary legislation. I urge the Government to support this, and I would be quite supportive generally of seeing more of this process in Bills more often: we have seen far too many of these Henry VIII clauses, as we have just heard.
Amendments 14, 15, 16 and 17 in the name of the noble and learned Lord, Lord Thomas of Cwmgiedd, to which I have also added my name, are aimed at trying to resolve issues around the framework document that we discussed at length in Committee. As we heard, the framework document is a slightly peculiar animal: it seems to have no real legal status, but it is an important document in how the bank will behave. The consensus around the Chamber in Committee was, I think, that the balance within that is too far towards including elements of principle rather than the day-to-day running of the bank. These amendments do not really address that. All they ask is for the framework document to be updated, and that it should be consistent with the statement of strategic priorities. That seems pretty straightforward and simple.
There are a number of areas where the more recent statement of strategic priorities is inconsistent with the framework document. One example—it is relevant to the discussion we had on the previous group about additionality—is that the strategic priorities expressly do not require local authority investments to achieve additionality, but the framework document does. Perhaps the Minister could explain why. I doubt that she will accept the amendments, but could she at least confirm that the framework document will be updated and that it will be brought into line with the statement of strategic priorities?
Amendment 18 in the name of the noble Lord, Lord Sharkey, addresses the extremely important point raised in Committee, I think by the noble Baroness, Lady Kramer, that as drafted the Bill—in conjunction with all these other governing documents, including the framework document—would require directions given by the Treasury to be published, but would not require situations where the board disagrees with that direction to be published or explained. Indeed, it effectively applies a gagging order, and that cannot be right. This important amendment brings in some essential transparency to that and I wholeheartedly support it.
I agree with the noble and learned Lord, Lord Thomas of Cwmgiedd, that the final amendment in the group is the most important. It introduces a simple requirement to consult the devolved Governments in various situations, and in preparing or changing the statement of strategic priorities. The bank’s activities will cover the whole UK, which I think is a good thing. The Minister has indicated, as does the statement of strategic priorities, that the bank is establishing a good relationship with the devolved Governments, and with the bank’s counterparts in the devolved nations. However, the Bill does not mention this. As someone who lives in Scotland and is a passionate unionist, I am consistently surprised by the fact that legislation that covers the whole UK rarely includes proper consultation requirements. That seems really counterproductive—even dangerous—as not taking proper account of the reasonable views and concerns of the devolved nations further undermines the strength of our union.
It gives ammunition to the nationalists that the Government do not take the devolved Governments seriously. We are heading rapidly towards a break-up of the union if we behave like this. This amendment does not create any veto powers or anything of that nature, which I would strongly disagree with that as you cannot work something if one party has a veto. It just requires consultation and that the reasonable views of the devolved nations be taken into account when setting the strategy or appointing directors.
I urge the Government to accept this. More widely, I urge them to start to be more consultative and include clauses of this nature more generally in Bills that cover the whole of the UK. That will strengthen, not weaken, the union and will ensure that the bank takes actions genuinely in the interests of all parts of the UK. If the noble and learned Lord decides to divide the House on this matter, I certainly will support him.
My Lords, I have added my name to all the amendments in this group but I will try to be brief. I want to pick up on the point just made by the noble Lord, Lord Vaux. Amendment 21 in the name of the noble and learned Lord, Lord Thomas, deals with consulting devolved Administrations. It ought to be a matter of course that in every Bill where consultation is important, it is in the Bill. It then underscores the constitutional relationship between central government and the devolved Governments. The expectation that it is to be dealt with either in other documents or just off the cuff is, I suspect, one of the reasons we see so much stress and pressure on the union today. It embodies a lack of respect, to be quite frank, and it ought to be a matter of course that we see these arrangements in a Bill.
I will look at the other amendments tabled and so well drafted by the noble and learned Lord, Lord Thomas. On updating the framework document, we have heard of nothing but the importance of that document. On almost every issue we raise, we are told that it does not need to be in the Bill because it is in this absolutely critical document—the framework document—which is actually a document agreed between the Treasury and the bank; it is not even necessarily in the public arena. Yet we can see that it is inconsistent with the Bill as it stands, never mind with the issues that have surfaced in the course of this very complex debate. It is a document that desperately needs to be updated. I know there is a plan to update it by the end of this year but that is completely out of touch with making sure that we have proper, consistent and meaningful arrangements in place for a bank that is already functioning as we stand here today. I very much support those amendments.
I now look at the two amendments from the noble Lord, Lord Sharkey. Amendment 13, so eloquently supported by the noble and right reverend Lord, Lord Sentamu, addresses another fundamental problem that we see in one piece of legislation after another: the wide use of Henry VIII powers to allow secondary legislation—which cannot be amended and, in effect, cannot be rejected—to change primary legislation fundamentally. It almost makes a joke of primary legislation. I know the Government would say that they would not exercise the power widely and it is just a marginal change here or there, but the Bill is already written to allow for marginal changes. The only time when that clause would be relevant would be if fundamental changes were to be made. I would argue that those should come back to Parliament, at least for the level of engagement of a super-affirmative.
I want to speak most to Amendment 18 because I am truly exercised on the issue of transparency. As others have said, the Bill requires the publication of a direction when the Treasury basically decides it is going to tell the bank what it can do. It can give it instructions that are either general or specific. It could say, “Make this loan and do it this way.” That is entirely allowed and there has to be a publication. But what is not that established is that when the bank says no and then is overridden, that information comes into the public arena. When it says no, it says so in a letter of reservation and the kind of issues it can raise are fundamental, such as issues of propriety, issues of ethical behaviour and issues of departing from the fundamental purpose of the bank.
I think we must have an absolute assurance that those will be published so that they are in the public arena. Let me give an example. The Minister has often drawn parallels between this bank and the British Business Bank, which allows me to draw a parallel with the British Business Bank’s decision to accredit Greensill to provide a Covid-related loan. We know, because it is now in the public arena, that when Greensill applied to the British Business Bank for accreditation, various parts of the Government fairly bombarded the British Business Bank with emails. They did not say “accredit it” but kept saying how important it was that they knew the result, asking whether it was done yet and saying that this would be fundamental to the future of steel in the UK and so on. Anyway, as we all know, the British Business Bank did accredit Greensill and, I suspect, regrets the very moment that it did so.
If a direction from the Treasury had been published on that issue, I am sure it would have said: “This direction is intended to make sure that our very important steel industry survives. It is to support jobs. It is to support communities related to the steel industry.” The reservation would have said something very different. I suspect it would have said: “We do not believe that the entity, Greensill, meets our ethical standards. We believe that it is basically an organisation that has got itself into some very unfortunate and potentially unethical arrangements and is on the verge of bankruptcy.” That is why it is important that the reservation notice is published and the conversation does not exist only in the context of the direction. That is why I say to the Minister that we cannot have an arrangement where the bank could, if it wished, publish its reservation notice; it is crucial that it publishes its reservation notice. I argue that on the grounds of the propriety that should surely lie at the heart of all the legislation that we provide in this House.
My Lords, I rise very briefly to say why—my Whip may not be too happy to hear this—I wish to vote for the amendment from the noble and learned Lord, Lord Thomas of Cwmgiedd, which I know is not the view of my party at present.
I think the distance between central institutions in London, such as the Bank of England, is far too great. We have not really taken account of the mechanics of devolution in our constitutional and legal arrangements. This was shown—very dangerously so—in the Brexit negotiations, when important features of the Welsh economy, notably in agriculture, were not attended to by the Westminster Government. Wales and, I suppose, Scotland were treated in a somewhat colonial fashion and the consequence was that a great deal of ill will was needlessly caused. The noble Lord across the House mentioned difficulties that have arisen in the case of Scotland.
I hope we would accept an amendment that thinks in terms of harmonising the economic strategies in London and the devolved authorities. I speak as one who believes strongly in the union but also in devolution for Wales. I hope very much that the amendment from the noble and learned Lord, Lord Thomas, who is deeply learned in these matters, will be accepted.
My Lords, I am grateful to the noble Lord, Lord Sharkey, and the noble and learned Lord, Lord Thomas, for tabling the various amendments in this group. I was pleased to sign Amendment 18, which would increase transparency relating to Treasury directions. The Minister and her officials have offered several helpful assurances on this subject during discussions between Committee and Report. I am grateful for those assurances, but I am not convinced that they go far enough. As with the earlier group on job creation and levelling up, this may be another area where the Treasury leans on the framework document as the preferred way forward. If that is where we end up after the Bill has been considered in another place, so be it, but there is merit in this House taking a view on transparency safeguards today.
Sadly, we have become all too familiar with non-legislative commitments or safeguards being flouted. By strengthening Clause 4, we can at least ensure that the bank will have a voice if there are concerns around the Treasury’s use of its powers. Accordingly, if the noble Lord, Lord Sharkey, divides the House on this issue, he will have our support.
Elsewhere, I appreciate the wish of the noble Lord, Lord Sharkey, to see the regulations under Clause 2 subject to a form of super-affirmative procedure. However, this concern was not raised by your Lordships’ Delegated Powers and Regulatory Reform Committee, and we will of course debate relevant regulations if and when they are brought forward in the future. The noble and learned Lord, Lord Thomas, has tabled a number of amendments in this group, and I hope that the Minister will be able to provide a comprehensive reply.
As with so many other pieces of Whitehall legislation, there is a clear overlap with devolved competence, and the Government will therefore have to seek consent Motions. I have huge sympathy for Amendment 21, which seeks to ensure formal consultation with the devolved authorities in certain circumstances. While the Government will dispute this, they have a poor and arguably worsening record in engaging with colleagues in the devolved nations. However, I am not convinced that an amendment to the Bill would change that, or that Conservative MPs will defy the Whip when the Bill is considered in the Commons. I hope this is an area where the Minister can provide strong, non-legislative commitments. Crucially, the Government must then follow through on them.
The union is at least fragile, and the way these relationships are conducted can add to that fragility. It is crucial on this occasion that the Government do everything they can to overcome the present concerns on this matter.
My Lords, Amendment 13 in the name of the noble Lord, Lord Sharkey, seeks to make the bank’s delegated powers subject to the super-affirmative procedure. As indicated in Erskine May, the super-affirmative procedure has been deployed for secondary legislation where an exceptionally high degree of scrutiny is thought appropriate. This procedure has rarely been considered the appropriate one to prescribe in primary legislation; where it has, the relevant instances have tended to be of a particularly substantive and wide-ranging sort. The noble Lord, Lord Sharkey, gave us an example but I had another: the Legislative and Regulatory Reform Act 2006, where the super-affirmative procedure was used to regulate significant powers under which Ministers could amend legislation to remove regulatory burdens. It cannot be said that amending the bank’s activities or the definition of infrastructure reaches the threshold of requiring the super-affirmative procedure. I have noted comments from noble Lords, but I also draw to their attention the Delegated Powers and Regulatory Reform Committee’s response to the Bill, which stated:
“There is nothing in this Bill which we would wish to draw to the attention of the House.”
On the other amendment from the noble Lord, Lord Sharkey, in this group, Amendment 18 on the power of direction, I recognise that there has been some concern about the wording in the framework document in relation to the issuing of directions. In particular, there were concerns that the Treasury would be able to “gag” the bank. That is clearly not the intention, and I have taken away the wording in section 15 of the framework document to make it clear that Her Majesty’s Treasury is not able to prevent publication of a written direction or any reservation notice in respect of that direction.
It is incumbent on the Treasury to meet its obligation to publish the direction and any associated reservation notice as soon as appropriate. Of course, there can be circumstances in which the publication of a written direction or any associated reservation notice needs to be delayed for reasons of national security or commercial sensitivity. An example of this occurred, in relation to a similar power in a different circumstance, during the sale of British Steel Ltd, where the Secretary of State directed the Permanent Secretary to continue an indemnity with the official receiver but delayed publication during negotiations with Jingye, despite value-for-money uncertainties, as to publish at the time would likely have undermined the rescue deal due to commercial sensitivity concerns. However, I will be clear with the House that if publication of a written direction were to be delayed for reasons of commercial sensitivity or national security, we would ensure that it was sent to the chair of the Public Accounts Committee immediately and on a confidential basis.
I hope that I have addressed the points made by the noble Lord, Lord Sharkey. However, to be absolutely clear, and maybe to go further than I did in our previous discussions, we will amend the framework document to be clear that where a direction is issued, an accompanying reservation notice “must” be published—rather than “may”—and, to further clarify, the content of the direction and reservations must be published rather than the fact of their existence. I hope that that provides further reassurance to noble Lords on that matter.
The amendments to Clause 3 in the name of the noble and learned Lord, Lord Thomas, seek to ensure that the bank’s framework document is updated to reflect any strategic steer, and that any revised framework document will be laid in Parliament. In maintaining the bank’s framework document, the Treasury will follow the guidance set out in Managing Public Money. This guidance states that framework documents should
“be kept up to date as the partnership”—
between a department and its arm’s-length body—
The Treasury will update the bank’s framework document as needed to follow this guidance. As has already been noted, the Treasury is currently reviewing the framework document and will publish a new version once the Bill has passed, which will include changes brought about by this House; for example, the clarification which I mentioned earlier in relation to the bank’s ability to publish a reservation notice if the Treasury subsequently issues the bank with a direction, and, in reference to an earlier debate, the clarification of the second objective in local and regional growth relating to levelling up and regional inequalities.
On the publication of framework documents, Managing Public Money is clear. Any revised framework documents should be published and laid in Parliament. Further, the Chief Secretary to the Treasury laid a Written Ministerial Statement today where he set out that all departments should lay their framework documents in Parliament. This has put the question of publication beyond doubt.
On whether the bank’s framework document should be updated to reflect the content of the strategic steer, I think that in that respect I differ in opinion from the noble and learned Lord, Lord Thomas. Managing Public Money sets out that framework documents should contain information on purpose, governance and accountability, decision-making, and financial management. It does not specify that they should contain information on current policy steers or priorities.
The bank’s framework document and strategic steers fulfil very different purposes; the framework document providing an agreement to govern the relationship between the bank and the Treasury, and the strategic steer providing an opportunity for the Government of the day to provide steers on current priorities and policy emphases. That does not mean that there will never be circumstances in which the framework document is updated. I have already told the House that we will reflect on the wording in the framework document on the regional and local economic growth objective. However, I do not think that the framework document needs updating every time a strategic steer is issued. It should be updated only when necessary, to provide for continuity and to avoid creating unnecessary resource burdens. The noble and learned Lord, Lord Thomas, would be inventing a new process for the framework document, when there is already a process set out in Annex 7.2 of Managing Public Money.
On this, I also refer noble Lords to the strategic steer issued by the Chancellor in March. This provided a steer on priorities for the bank in light of the situation in Ukraine, and the recently concluded environment review, as well as other priorities for the bank to reflect in its first strategic plan. None of this information impacted the high-level framework under which the bank operates, as set out in the framework document, and therefore a mandatory update to the framework document would have been unnecessary. However, the strategic steer must be reflected in the bank’s strategic plans. This is provided for in the Bill.
Amendment 21 seeks to bring a consultation process on the use of some of the powers in the Bill with the devolved Administrations. I appreciate the intent, but this will cut directly across the negotiations that we are having with the devolved Administrations on the legislative consent process. This was brought up in Committee and I explained then that the normal practice is to bring forward any amendments required for a legislative consent Motion in the second House, which for this Bill would be the Commons. It would not be appropriate to accept this amendment until we have begun those negotiations with the devolved Administrations in earnest.
I hope that I can reassure noble Lords by saying that we have begun those discussions with the devolved Administrations in a positive fashion. Engagement with the devolved Administrations on the set-up of the bank was also positive. They all support the establishment of a national infrastructure bank. The bank has also been developing its own relationships with the devolved Administrations and their respective institutions, such as the Scottish National Investment Bank. The bank has now also completed deals in all four nations.
The tone and tenor of the bank’s relationships with the devolved Administrations and their respective institutions, and the way that the bank has gone about its business so far, give noble Lords in this House quite a bit of reassurance, I hope, about the collaborative approach that the bank has taken so far and intends to take in future. Therefore, I hope that the noble Lord, Lord Sharkey, feels able to withdraw Amendment 13.
I thank the Minister for her response and thank all other noble Lords who spoke to Amendment 13. I detect a chillier wind from my right than I would have liked. Under those circumstances I can only repeat that the House will not have a substantive opportunity to scrutinise these important things. I regret that. The loss of both parliamentary authority and the ability to scrutinise what comes before us is a critical issue, which I have no doubt we will come back to in future Bills. In the meantime, I beg leave to withdraw Amendment 13.
Amendment 13 withdrawn.
Clause 3: Strategic priorities and plans
Amendments 14 to 17 not moved.
Clause 4: Directions
Amendment 18 not moved.
Clause 7: Directors: appointment and tenure
19: Clause 7, page 3, line 17, at end insert—
“(ba) at any time, the Bank has at least one non-executive director who is a representative of workers;”Member's explanatory statement
This amendment ensures that the Bank’s board would have at least one workers’ representative at any time.
My Lords, in Committee we had a wide-ranging debate about the bank’s board and whether the Bill should include requirements about its composition, expertise, and so on. Responding, the Minister said that she could understand my temptation to have a workers’ representative on the board but asserted that it was not necessary for several reasons.
During our very helpful follow-up discussions, we have discussed the various processes being followed by the bank as it constitutes its board. I have been assured that my concerns will be dealt with in due course, though it is not clear exactly how and when. I have therefore re-tabled the amendment that I tabled in Committee to give the Treasury another opportunity to explain the position. If it were the Labour Party setting up this institution, we would ensure that the board contained at least one non-executive director responsible for representing the views of workers. Having those views aired would improve the quality of jobs created through the bank’s investments.
I will not pre-empt the noble and learned Lord, Lord Thomas, in relation to his Amendment 20, but it is fair to say that there is genuine concern across Your Lordships’ House when it comes to the effectiveness of this board. I hope that the Minister can offer a degree of reassurance today and perhaps commit to providing updates on the bank’s appointments, as and when they are confirmed. I beg to move.
My Lords, I will speak briefly to Amendment 20. I traversed the reasons for this amendment at Second Reading. I traversed them again in Committee. I need not weary your Lordships by traversing them a third time. The points are obvious.
Enlightened departments have now agreed to put into Bills qualifications for the boards of important institutions. One sees that in the Climate Change Act and the Environment Act. It is a great pity that the Treasury is not an enlightened department. It should have a little more humility and appreciate that if you are to run something as important and, ideally, successful as an infrastructure bank, you ought to tick off the qualifications of the board as a whole. I have listed what they should be; they are drawn very carefully from the Climate Change Act and the Environment Act and adapted to ensure what I spoke about earlier; namely, that you have people who come from the devolved nations or who have a knowledge of the devolved nations. This is another way of dealing with the point.
However, having made those arguments, which are obvious and ought to be accepted, I fear that the Treasury is obdurate on this point. I just hope that in due course there will be a more humble and less entrenched view than its omniscient view about its capacity to do everything without some statutory guidance.
My Lords, briefly, I support Amendment 20 in the name of the noble and learned Lord, Lord Thomas. It is self-evident that the bank’s board should have the experience and skills that the noble and learned Lord proposes in his amendment, rather than just being Treasury placemen. The success or failure of the bank in achieving its objectives will depend entirely on the experience of the people running it, so I urge the Minister to accept this very common-sense amendment.
My Lords, I offer Green group support for Amendment 20, to which we would have attached our name had there been space.
In Committee, I suggested that the bank should not be in the hands of the Treasury at all. I got some expressions of interest but not enough support to bring it back on Report. However, it is clear that we need systems thinking, as I often say in your Lordships’ House. We need an approach that looks beyond the narrow growth in GDP to something broader and more holistic. This amendment is a step towards achieving that.
My Lords, I speak on this group with some trepidation; I hope I do not show the lack of humility that the noble and learned Lord, Lord Thomas, has accused my department of. I will stand up for the Treasury: in my dealings with this group of public servants, they have been bright and suitably humble, trying to work in the best interests of the country.
I will take the amendments in reverse order. The amendment tabled by the noble and learned Lord, Lord Thomas, as he explained, seeks to ensure that the bank’s board has the necessary expertise to deliver on its objectives. He is right to focus on the importance of the bank’s board in steering this nascent institution to deliver on its two wide-ranging objectives across the whole of the UK.
I reassure noble Lords that the bank’s board already contains a wealth of experience in infrastructure finance, policy-making, economics and green investments, across the public and private sectors. Collectively, its members have worked at similar national organisations, such as the Canada Infrastructure Bank, the UK Green Investment Bank and UK Export Finance, as well as leading financial services firms and central government departments. John Flint, the bank’s CEO, was chief executive of HSBC, and Annie Ropar was the CFO at the Canada Infrastructure Bank. So, in its infant form, it has already attracted some high-quality individuals to work there.
The bank’s non-executive directors were recruited in line with the guidelines set out by the Office of the Commissioner for Public Appointments, and were selected based on the skills they could bring to the board to deliver on the bank’s mandate. These appointments could be audited by OCPA in due course. OCPA’s guidelines include a principle of merit, which means
“providing Ministers with a choice of high quality candidates, drawn from a strong, diverse field, whose skills, experiences and qualities have been judged to meet the needs of the public body or statutory office in question.”
As I have said in previous groups, in drafting this Bill, we are seeking to create a high-level framework within which the bank can operate, while providing for the longevity of its objectives. Therefore, given that appointments are already recruited in line with OCPA’s guidelines, which we expect OCPA to review and which include a principle of merit, I do not think it is necessary to add greater specificity to the Bill on this point. Including these provisions could be overburdensome and prevent the bank and Treasury hiring the most appropriate people for the roles.
I spoke about the recent appointments in Committee, so do not propose to do so in detail again, but I would be very surprised if the noble and learned Lord, Lord Thomas, could find much fault with the appointees. He has also expressed an interest in the representation of the devolved Administrations and, as he spoke about on the previous group, in making sure that the board and the bank command the confidence of all four nations in the UK. As I said to him before and will happily say again, commanding that confidence is central to how the bank has gone about its business. The skills of the board will adequately represent the needs of all four nations, although, as I said on the previous group, specifics in that area are not necessarily a discussion for now, as they are part of the process of legislative consent. I therefore hope that the noble and learned Lord does not move his amendment when it is reached.
The amendment of the noble Lord, Lord Tunnicliffe, seeks to ensure that the bank always has a representative of the workers on its board. The UK Corporate Governance Code already states that a company should have one or a combination of a director appointed from the workforce, a formal workforce advisory panel or a designated non-executive director to facilitate engagement with the workforce. It also states that, if the board has not chosen one or more of these methods, it should explain what alternative arrangements are in place and why.
I give the noble Lord my absolute reassurance that the bank will comply with the UK Corporate Governance Code; however, as I have said, it is a nascent institution, with its board appointments made and the non-executive directors joining only recently. The bank has not yet had the opportunity to determine how it will meet this specific provision. It is currently establishing its governance and will report on its progress in its annual report and accounts. The noble Lord can expect an update there.
I am happy to write to the noble Lord to set out those anticipated timelines. The annual report and accounts are published and laid before Parliament so, between those two pieces of information, I will endeavour to cover this for the noble Lord. If we reach the annual report and accounts and are not in a position to do so, I will pick this up again then and ensure that I get back in touch.
My Lords, I thank all noble Lords who have participated in this debate, and I thank the noble Baroness for her assurances on my specific point. I hope that it is seen through and that the result is not that the bank explains that it is not following the code, for some reason. This is an alternative, but one that I would deeply regret if it were chosen. With that, I beg leave to withdraw my amendment.
Amendment 19 withdrawn.
Amendment 20 not moved.
21: After Clause 7, insert the following new Clause—
“Consultation with devolved governments(1) Before exercising the powers of the Treasury under section 2(6), the Treasury must consult the Northern Ireland departments, the Scottish Ministers and the Welsh Ministers and take account of any views expressed in the consultation.(2) Before preparing a statement of strategic priorities under section 3(1) and before exercising the powers under section 3(3) to revise or replace the statement, the Treasury must consult the Northern Ireland departments, the Scottish Ministers and the Welsh Ministers and take account of any views expressed in the consultation.(3) Before exercising the powers of the Chancellor of the Exchequer under section 7, the Chancellor of the Exchequer must consult the First Minister of Scotland, the First Minister of Wales and the Northern Ireland Executive and take account of the views expressed in the consultation.”Member's explanatory statement
This amendment provides for there to be consultation with the devolved governments in relation to amendments of the Act under clause 2(6), the statement of strategic priorities under clause 3(1) and 3(3), and the appointment of directors by the Chancellor of the Exchequer under clause 7.
My Lords, I listened very carefully to what the Minister said but, in view of the great constitutional importance of ensuring that we put this into Bills and my wish to put down a marker on this point for the future, I would like to test the opinion of the House.
Clause 9: Reviews of the Bank’s effectiveness and impact
22: Clause 9, page 4, line 2, leave out “Treasury must” and insert “Chancellor of the Exchequer must appoint an independent person to”
Member's explanatory statement
This amendment (and the others to clause 9 in the Minister’s name) would require: reviews to be carried out by an independent person; the reviews to include consideration of “additionality”, or the extent to which the Bank’s investments encourage additional investment by the private sector; the independent person to give reports to the Treasury; the Treasury to publish those reports. The time limit for completing the first review would be 7 (rather than 10) years.
My Lords, I turn to Clause 9 of the Bill, on the statutory review. We had an extensive debate on this in Committee and, reflecting on that debate, the Government have tabled several amendments to this clause.
On the timing of the review, in Committee I set out the rationale for the first statutory review of the bank taking place after 10 years. This was for two reasons: first, to ensure that we could accurately measure the effect of the bank’s long-term investments and, secondly, to ensure that we do not overburden the bank with constant reviews. As I have previously noted, the Treasury is currently undertaking a review of the bank’s framework document and will undertake a review by spring 2024 of the bank’s capitalisation. The bank will also be subject to frequent Cabinet Office-sponsored arm’s-length body reviews, which should be conducted by an independent person.
However, I understand the strength of feeling in the House and, for this reason, I tabled an amendment to shorten the timescale for the first statutory review. Bringing forward the initial review to take place no later than seven years after Royal Assent will mean that the first statutory review will be conducted in 2029. This fits neatly with the timing of the levelling-up missions, which the bank’s work will support, that are due to be achieved by 2030.
I turn to my other amendments to Clause 9. I heard concerns in Committee that the Treasury would, in these reviews, be marking its own homework. That was not the intention, and so I have brought forward an amendment to clarify that the Treasury will appoint an independent reviewer to conduct the review. Noble Lords will, I hope, be further reassured that the Cabinet Office-sponsored reviews, as I have just noted, will have a recommendation that they be conducted by an independent reviewer too. I hope noble Lords are content with these amendments. I beg to move.
My Lords, I rise to speak to my Amendments 30 and 32. I am grateful to the noble Baronesses, Lady Noakes, Lady Kramer and Lady Bennett of Manor Castle, for their support. In fact, I think I may have achieved a world first in getting the noble Baronesses, Lady Noakes and Lady Bennett, to sign the same amendments. I hope, therefore that the Minister might take note of this extraordinary event and take the amendments seriously.
First, I thank the Minister for her amendments in this group, and for listening to and acting on the concerns that were raised by noble Lords as the Bill has proceeded. Her amendments are very welcome, especially those that deal with the issue that was previously raised about the Treasury marking its own homework. Having an independent person carry out the review is an important step. I also welcome the reduction of the period before the first review from 10 years to seven years. I think everyone agreed that 10 years was way too long, but even after that change, there will still be a review only every seven years, which I still think is too long. Amendments 30 and 32 would reduce this to every five years.
The argument in favour of the longer period seems to be that infrastructure investment is long-term, which it is, and therefore it will take a longer period before the success of the bank can be evaluated. I think this rather misses the point. Although it is true that the success of a particular investment may take more than seven years—indeed, it might be 20 or 30—to become clear, the review should be covering how effectively the bank has performed in making investments. Is it making enough investments, are they appropriate, are they in the appropriate parts of the country and, importantly, do they meet the additionality principle and, as we discussed earlier, the crowding-out problem? We do not need to wait until the investments themselves reach maturity to be able to see how well or badly the bank is performing in making investments.
This is especially true now that the only way of assessing the bank’s performance, in terms of additionality and crowding out, is through this review. Seven years is a very long time to wait before we can see whether the bank is achieving its additionality objectives; in particular, whether it is in fact crowding out private finance. A lot of damage will have been done in seven years if it is. It would be more difficult to change the direction if we wait that long.
Seven years is also substantially longer than the parliamentary cycle, and it does seem appropriate that the review period should be brought closer to that cycle. I have proposed a compromise of a five-year cycle, which is a balance between being too much of a burden on the bank and an appropriate level of scrutiny and transparency. I do not expect the Minister to accept this, and I am not going to push it to a Division, but she has mentioned in the past that the bank will be subject to all sorts of different reports, scrutiny, and so on. I ask her to at least confirm that the annual report and accounts will contain information on the progress of the bank, in terms of the sort of investments it is making and, in particular, that that will touch on the additionality question, even if it falls short of a formal review.
My Lords, I will be very brief. I thank the Minister, particularly, for establishing that the review will be carried out by an independent body. That is absolutely crucial; we really could not have had the Treasury marking its own homework. That is now going to be established on the face of the Bill.
In terms of the review period, I am totally with the noble Lord, Lord Vaux, on this one. I add one reason to the many powerful arguments that he made. The two issues that this bank is set to address, climate change and levelling up, have a great deal of urgency behind them. Therefore, the decisions that the bank makes in its early days, even if they have a long tail to them, will be crucial. If that direction needs to be changed, the bank needs to know that that is Parliament’s view before we get to seven years out, at which point, particularly around climate change, it will be far too late to change a direction that is not meeting the needs of our climate change agenda. So, particularly for this bank, because it is tied to very specific objectives, a much earlier review phase is crucial.
I join the noble Lord, Lord Vaux, in being interested in how the Minister will lay out these other reviews that are meant to fill that gap. Why should we be having partial reviews that partially fill parts of the gap, rather than the comprehensive reviews on impact that could be managed under various amendments before the House today?
My Lords, although I see an attraction in a higher frequency than the Government are proposing, equally, I think that, in many ways, even five years is too long. I take comfort in what I hope to hear from the Minister: that we will have much of the information we need to come to a judgment about the success, and effectiveness—crowding in and all those issues—annually in the report. Her assurance on that matter is crucial, but I have confidence that she will be able to give it.
My Lords, as I have said, I have listened to the concerns of the House around Clause 9, and it is for that reason that I have sought a compromise and tabled the government amendments to this clause, as I outlined earlier.
On the shortened timescale proposed by the noble Lords, Lord Vaux and Lord Tunnicliffe, and others, I have already set out the rationale for why the Government have gone for seven years. To reassure noble Lords on their questions about needing more regular information, quite rightly, on how the bank is performing, the bank’s strategic plan set out a whole range of KPIs that it will be assessed against, including additionality, to address the point made by the noble Lord, Lord Vaux. Those KPIs will be reported on in the annual report and in the updates to the strategic plan in future.
So more regular information will be provided on the progress of the bank, not just through the statutory review. In addition to the other reviews that I mentioned in my opening speech, there is currently a review by the National Audit Office looking at the set-up of the bank. As I said in Committee in response to my noble friend Lady Noakes, the bank is also subject to reports and investigations by Select Committees of both Houses and has already come to give evidence before those committees. I reassure noble Lords that the statutory review is not the only avenue through which the work of the bank will be scrutinised. There will be ongoing scrutiny through several different avenues, including in its annual report and accounts, which will judge its progress against many KPIs. With that, I beg to move.
Amendment 22 agreed.
23: Clause 9, page 4, line 5, after “growth” insert “(including the extent to which its investments in particular projects or types of project have encouraged additional investment in those projects or types of project by the private sector)”
Member’s explanatory statement
See the explanatory statement for the Minister’s first amendment to clause 9.
Amendment 24 (to Amendment 23) not moved.
Amendment 23 agreed.
Amendments 25 to 29
25: Clause 9, page 4, line 5, at end insert—
“(1A) After each review, the independent person must—(a) prepare a report of the review, and(b) submit the report to the Treasury.”Member’s explanatory statement
See the explanatory statement for the Minister’s first amendment to clause 9.
26: Clause 9, page 4, line 6, leave out “After each review,” and insert “On receiving a report,”
Member’s explanatory statement
See the explanatory statement for the Minister’s first amendment to clause 9.
27: Clause 9, page 4, line 7, leave out “a report of the review” and insert “the report”
Member’s explanatory statement
See the explanatory statement for the Minister’s first amendment to clause 9.
28: Clause 9, page 4, line 9, leave out “published” and insert “submitted to the Treasury”
Member’s explanatory statement
See the explanatory statement for the Minister’s first amendment to clause 9.
29: Clause 9, page 4, line 9, leave out “10” and insert “7”
Member’s explanatory statement
See the explanatory statement for the Minister’s first amendment to clause 9.
Amendments 25 to 29 agreed.
Amendment 30 not moved.
31: Clause 9, page 4, line 11, leave out “published” and insert “submitted to the Treasury”
Member’s explanatory statement
See the explanatory statement for the Minister’s first amendment to clause 9.
Amendment 31 agreed.
Amendment 32 not moved.
33: Clause 9, page 4, line 11, at end insert—
“(5) In this section, references to an “independent person” are to a person who appears to the Chancellor of the Exchequer to be independent of—(a) the Treasury, and(b) the Bank.”Member’s explanatory statement
See the explanatory statement for the Minister’s first amendment to clause 9.
Amendment 33 agreed.
CHOGM, G7 and NATO Summits
My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Prime Minister.
“With permission, Mr Speaker, I will make a statement about the NATO, G7 and Commonwealth summits, held in Madrid, Schloss Elmau and Kigali respectively.
In the space of seven days, I have had the opportunity to work alongside more than 80 Governments—nearly half the entire membership of the United Nations—and to hold bilateral talks with more than 25 leaders, ranging from the new Presidents of South Korea and Zambia to the Prime Ministers of Japan and Jamaica, demonstrating the global reach of British diplomacy and the value of our presence at the world’s top tables.
Our immediate priority is to join with our allies to ensure that Ukraine prevails in her brave struggle against Putin’s aggression. At the Madrid summit, NATO exceeded all expectations in the unity and single-minded resolve of the alliance to support Ukraine for as long as it takes, and to explode the myth that western democracies lack the staying power for a prolonged crisis.
All of us understand that if Putin is not stopped in Ukraine, he will find new targets for his revanchist attacks. We are defending not some abstract ideal but the first principle of a peaceful world, which is that large and powerful countries cannot be allowed to dismember their neighbours, and that if this was ever permitted, no nation anywhere would be safe. Therefore our goal must be for our Ukrainian friends to win, by which I mean that Ukraine must have the strength to finish this war on the terms that President Zelensky has described.
When Putin claimed that by invading his neighbour he would force NATO away from Russia, he could not have been proved more spectacularly wrong because the single most welcome outcome of the Madrid summit was the alliance’s agreement to admit Finland and Sweden. I hope I speak for the whole House when I say that Britain will be proud to stand alongside these fellow democracies and reaffirm our unshakeable pledge to come to their aid and defend them if ever necessary, just as they would for us. We were glad to smooth their path into NATO by giving both nations the security assurances they needed to apply for membership, and when I met Prime Minister Andersson of Sweden and President Niinistö of Finland last Wednesday, I told them I was certain that NATO would be stronger and safer for their accession.
Before Putin’s onslaught, both countries had prized their neutrality, even through all the crises of the Cold War, and it is a measure of how seriously they take today’s threat that opinion in Sweden and Finland has been transformed. It speaks volumes about Putin’s folly that one permanent consequence of his attack on Ukraine will be a doubling of the length of NATO’s border with Russia. If anyone needed proof that NATO is purely defensive, the fact that two quintessentially peaceable countries have chosen to join it demonstrates the true nature of our alliance.
Now is the time to intensify our help for Ukraine, because Putin’s Donbass offensive is slowing down and his overstretched army is suffering heavy casualties. Ukraine’s success in forcing the Russians off Snake Island by sheer weight of firepower shows how difficult the invader will find it to hold the territory he has overrun. We need to equip our friends now to take advantage of the moment when Putin will have to pause and regroup, so Britain will supply Ukraine with another £1 billion of military aid, including air defences, drones and electronic warfare equipment, bringing our total military, humanitarian and economic support since 24 February to nearly £4 billion.
To guarantee the security of our allies on the eastern flank, NATO agreed in Madrid to bolster its high-readiness forces, and we in the UK will offer even more British forces to the alliance, including almost all of our surface fleet. We have already doubled our deployment in Estonia, and we will upgrade our national headquarters to be led by a brigadier and help our Estonian friends to establish their own divisional headquarters. If you follow the trajectory of our programmes to modernise our Armed Forces, Mr Speaker, you will draw the logical conclusion that the UK will likely be spending 2.5% of GDP on defence by the end of this decade.
Earlier, at the G7 summit, the first full day of talks coincided with a Russian missile destroying a Ukrainian shopping centre, killing at least 18 people. This barbaric attack on an obviously civilian target strengthened the resolve of my fellow leaders to provide Ukraine with more financial, humanitarian, military and diplomatic backing for, and I quote the communiqué,
‘as long as it takes’.
That is exactly the term later echoed by NATO. The G7 has pledged nearly $30 billion of financial support for Ukraine this year, and we will tighten our sanctions on Russia. The UK will join America, Japan and Canada to ban the import of Russian gold, which previously raised more export revenues than anything else except hydrocarbons.
The G7 will devise more options for ensuring that nearly 25 million tonnes of grain, trapped inside Ukraine by Putin’s blockade, reaches the countries that rely on these supplies. Just as the world economy was recovering from the pandemic, Putin’s war has caused a surge in global food and energy prices, raising the cost of living everywhere, including here at home. The G7 agreed to
‘take immediate action to secure energy supply and reduce price surges…including by exploring additional measures such as price caps.’
We will help our partners in the developing world to meet their climate targets and transform millions of lives by constructing new infrastructure according to the highest standards of transparency and environmental protection. Through our Partnership for Global Infrastructure and Investment, an idea launched by the UK at the Carbis Bay summit last year, we will mobilise up to $600 billion of public and private investment over the next five years.
Many beneficiary nations will be members of the Commonwealth, and I was very pleased to attend the Kigali summit of this unique association of 56 states, encompassing a third of humanity. More countries are eager to join, and we were pleased to welcome two new members, Gabon and Togo.
It is an amazing fact that our familiar legal and administrative systems, combined with the English language, knock 21% off the cost of trade between Commonwealth members. It is because the Commonwealth unites that advantage with some of the fastest-growing markets in the world that we are using the sovereignty that the UK has regained to sign free trade or economic partnership agreements with as many Commonwealth countries as possible. We have done 33 so far, including with Australia and New Zealand, and we are aiming for one with India by Diwali in October.
It is true that not every member of the Commonwealth sees Putin’s aggression as we do, or exactly as we do, so it was vital to have the opportunity to counter the myths and to point out that food prices are rising because Putin has blockaded one of the world’s biggest food producers. If large countries were free to destroy their neighbours then no Commonwealth member, however distant from Ukraine, would be genuinely secure.
The fact that, in a week, the UK was able to deal on friendly terms with scores of countries in three organisations shows the extraordinary diplomatic assets our country possesses. As we stand up for what is right in Ukraine and advance the values and interests of the British people, I commend this Statement to the House.”
My Lords, I am grateful to the noble Baroness for repeating the Statement, and I am sure the whole House welcomes that we are able to put our differences aside to unite in support of Ukraine against Putin’s aggression, just as allies have been able to do so at the G7 and NATO this past week.
Because this shocking war continues, we cannot afford to lose focus on this issue, so we fully welcome the reaffirming of opposition to the invasion and the new steps taken to support Ukraine’s resistance. However, for as much as we should all welcome the unity on display in Madrid and the Bavarian Alps, it is disappointing that the Prime Minister used CHOGM to launch an unsuccessful and completely unnecessary campaign to remove the Secretary-General of the Commonwealth: our colleague and a Member of your Lordships’ House, my noble and learned friend Lady Scotland. He should have been focusing on uniting members rather than stoking divisions, especially when it was clear that his was not a majority view. Can I press the noble Baroness and seek an assurance? Now that this issue has been resolved, I would like her to assure the House that the PM fully recognises the decision of the Commonwealth to support my noble and learned friend Lady Scotland, and, along with others, will give full support to her and the work that she and others will have to undertake. I would be grateful if she could make that assurance, because we all want to ensure the success of the Commonwealth.
This year’s 26th Commonwealth Heads of Government Meeting in Kigali was all the more important given that it had been postponed since 2020. It was hosted by the latest addition to the Commonwealth, Rwanda, so was another reminder of the diversity among members. But it also reminded us of the inequality among members. The communiqué’s focus, therefore, on governance, human rights and the rule of law, sustainability, health, youth, and technology and innovation made for very fitting themes. But the agreements they come to have to lead to some tangible actions, particularly when the Commonwealth is now lagging so far behind on the sustainable development goals. Can the noble Baroness commit to updating this House on progress towards meeting the actions for this year’s CHOGM before the next meeting in Samoa?
The G7 really serves as another reminder that, just as in the same way as Covid impacted each country differently, recovery is also unequal. In the aftermath of the 2008 financial crash the then Prime Minister, Gordon Brown, offered real leadership in the global recovery, and he sought to bring countries together: to work together, to plan together, to take actions together. The global economy and the cost of living, of course, featured heavily in this summit. It is not to our credit that the leadership the UK offers is on sky-high inflation, and we are the only member of the G7 putting up taxes.
Leaders were right to focus significantly on the events in Ukraine. I am pleased that the communiqué emphasised the condemnation of Russia’s invasion of Ukraine, with members agreeing financial support for humanitarian aid. The noble Baroness may be aware that the World Food Programme has warned that acute hunger globally is expected to rise by 47 million people due to the Ukraine war. What progress has been made in identifying alternate sources of food supplies to tackle what is a global crisis, and will the Government heed the call for the UN to convene an emergency global food summit this year?
Moving on to NATO, I am sure the whole House will welcome that Finland and Sweden are soon to join the alliance. Clearly this was not what Putin intended when invading Ukraine, but he has brought about the very thing that he least wanted: an expanded and stronger NATO. However, as much as the announcement on an extra £l billion in military support by the Government is welcome, it was frustrating to see that being undermined by Ministers having these public rows about defence spending. I similarly welcome the announcement of a further 1,000 troops being sent to Estonia but, if the noble Baroness could say something about how that plays into the cut of 10,000 troops from the British Army over the next three years, it would help to reassure those of us who have concerns that decisions taken by Ministers are going to make it harder for the UK to fulfil the NATO obligations.
I also welcome that allies considered recent actions by China, discussing
“malicious hybrid and cyber operations and its confrontational rhetoric and disinformation”
targets. Can the noble Baroness update the House on the work of our Government to resist such operations, obviously taking into account that we will have to work globally on these issues?
This is a fragile time for the global economy. The risks posed to our collective security are greater now, and the UK must be outward-looking, building alliances through trust. As the Summer Recess approaches, I hope the Minister can give an assurance that, should issues escalate, this House would be recalled to discuss any emerging problems. We hope those do not happen, but it has to be on record that we are willing to do so if it should be necessary.
I also hope that the Government can reflect on the long-term consequences of what has unfolded. If the UK and our allies are to look ahead to a more secure and prosperous future, we must accept that we can do so only through a focus and adherence to international law and order. The G7, NATO and the Commonwealth are all forums that can promote these principles when people work together, but those values have to be reflected at home, not just in summits abroad. First, can the noble Baroness say when we will see the full implementation of the recommendations in the Russia report? Given that foreign donations to political parties were made easier in the Elections Act, we need to be sure—and to be reassured—that the Government are serious about action.
Also, the noble Baroness will surely understand how deeply regrettable it is that the Northern Ireland Protocol Bill is being brought forward in violation of international law. That damages the UK’s moral authority and political credibility on the world stage. If there is one message for the Government, it is that Ministers cannot just pick and choose when to abide by international law. In the Statement, repeating the Prime Minister’s words, she referred to the “extraordinary diplomatic assets” that we have. That is true, but there does seem to be a tension: that we are not using those to best advantage, and that we are undermining those who have spent many years developing them as an important asset for the UK. International co-operation and trust are essential. It is not a pick’n’mix just when it suits the Government, and that needs to be a theme running through everything that the Government do on the international stage.
My Lords, this Statement is probably unique, combining as it does three consecutive meetings of groups of the world’s leading democracies. As the Prime Minister says, the NATO summit showed a commendable unity in expressing its support to Ukraine. However, as this weekend’s Russian gains on the battlefield have shown, mere promises of more armaments are of little help to the Ukrainian soldiers on the front line. Speed is now of the essence in actually delivering them. Can the noble Baroness say how quickly it will be possible for the UK to get the additional weaponry which we have committed to Ukraine into Ukrainian hands, and into front-line operations?
Clearly, a major challenge in the provision of the latest weaponry is to train the Ukrainians in its deployment. The UK is obviously providing training to Ukrainian personnel in the use of the weapons which we supply, but I believe we have also offered to provide more basic training to very much larger numbers of Ukrainian recruits. Could the noble Baroness update the House on the state of discussions on this proposal, and whether—and if so when—we might expect to see significant numbers of Ukrainians coming to the UK for their military training?
The Statement says that, as part of our increased commitments to NATO, we will offer
“almost all of our surface fleet”
to the alliance. What does this mean for where ships will be deployed? Specifically, does it mean that we will no longer deploy our carriers into the South China Sea, but keep them within the European theatre?
More generally on our defence budget, the Prime Minister says that the UK is likely to spend up to 2.5% of GDP on defence by the end of the decade. Does the noble Baroness agree with the figures produced by the House of Commons Library last week, which show that the Ministry of Defence budget is actually being cut as a result of our soaring inflation, and is on course to have a 5.6% real-terms cut in day-to-day expenditure by 2024-25? Such a cut is, of course, in breach of the Conservative general election manifesto promise to increase the defence budget in line with inflation. When will the Ministry of Defence receive the funding to reverse that real-terms cut?
What thought has been given to where any extra resources might be allocated? The noble Baroness will be well aware of concern across the House on the precipitate fall in the number of soldiers in the Army. Do the Government intend to reverse these cuts, as they increase overall military spending?
On the crucial area of energy supply, the G7 committed to exploring oil and gas price caps. Which country is taking this proposal forward? In particular, what role is the UK playing in developing this potentially important option?
The G7 is committed to countering Chinese influence globally by spending £600 billion of public and private investment over the next five years. What part is the UK playing in achieving this? Specifically, how much public investment do the UK Government plan to allocate to this programme?
The Prime Minister bookended his Statement by extolling the reach and depth of British diplomacy. Although it is true that our membership of NATO, the G7 and the Commonwealth means that we were in the same room as half of the membership of the UN, being present is not the same as being influential. To be influential and effective, your opposite numbers must trust you to keep your word and stick to your agreements, but, under this Prime Minister, they simply cannot do so.
In the extraordinary article by the German and Irish Foreign Ministers in yesterday’s Observer, they state of the Irish protocol:
“Instead of the path of partnership and dialogue, the British government has chosen unilateralism. There is no legal or political justification for unilaterally breaking an international agreement entered into only two years ago.”
Every Government in the world will have seen these words and will be making their calculations. If we break our international agreements once, what is to stop us doing so again? With this Prime Minister, whose word counts for nothing and for whom facts are expendable, our stock internationally is low and falling. All the warm words in today’s Statement cannot begin to reverse this fundamental failing.
I thank the noble Baroness and noble Lord for their comments. I will pick up on a number of their questions. On the noble Baroness’s point, we have of course worked very well with the noble and learned Baroness, Lady Scotland; we have done so for a long time and will continue to do so, because we all want to do everything we can to strengthen the Commonwealth Secretariat and deliver for Commonwealth members. I am sure that my noble friend Lord Ahmad will be able to update the House, as the noble Baroness suggested.
On the noble Lord’s questions on the G7, as he rightly said, the G7 communiqué said that to reduce price surges it is considering additional measures such as price caps to stabilise energy markets. Leaders have tasked the relevant Ministers to evaluate the feasibility and efficiency of these measures urgently so that action will be taken.
On the Partnership for Global Infrastructure and Investment, this is a G7 initiative to narrow the investment gap for sustainable, inclusive, climate-resilient and quality infrastructure in emerging markets in developing countries. Through the G7, we will mobilise the private sector for accelerated action and support just energy transition partnerships. We launched the first of these JETPs with South Africa at COP 26, and we are currently working towards future partnerships with India, Indonesia, Senegal and Vietnam.
The noble Baroness rightly highlighted the grave concern about the food supply. As she and all noble Lords will know, 25 million tonnes of corn and wheat cannot be exported due to Putin’s blockade. As the noble Baroness said, more than 275 million people worldwide were already facing acute hunger at the start of 2022, and that is now expected to increase by 47 million if the conflict continues. So, at CHOGM, we committed an additional £372 million, for instance, for countries most impacted by rising global food prices, including £130 million this financial year for the World Food Programme, which she mentioned, to fund its life-saving work around the world, including in Commonwealth countries. We committed £133 million for research and development partnerships with world-leading agricultural and scientific organisations to develop and implement technologies to improve food security, such as new drought-resistant crops. We also announced £52 million for the UN’s global emergency response fund and £37 million for the UN International Fund for Agricultural Development.
Both the noble Lord and the noble Baroness mentioned defence spending. At the NATO summit, the Prime Minister outlined how we will need to invest for the long term in vital capabilities like future combat air and AUKUS. These investments mean that we are on track to spend 2.5% of GDP on defence by the end of the decade. Noble Lords will know that UK defence spending is projected to reach 2.3% of GDP this year due to the UK defence industry investment and the £2.3 billion of extraordinary support for Ukraine. We are increasing defence spending by over £24 billion over the next four years—the biggest investment in our Armed Forces since the Cold War.
The noble Lord asked about UK forces in NATO. As he rightly said, we announced our commitments to the NATO force model: we will make available RAF Typhoon and F35B Lightning fighter jets, royal naval vessels—including Queen Elizabeth-class aircraft carriers—and brigade-size land forces to NATO’s Supreme Allied Commander Europe. We will significantly increase our availability, which will include the majority of our maritime forces. Either the noble Lord or the noble Baroness referred to our announcement of the expansion of our national headquarters in Estonia to ensure that we can provide rapid reinforcements with our high-readiness forces if needed.
The noble Lord asked about the new military support for Ukraine, and of course we will work with the Ukrainians to get that aid and support to them as soon as possible. But I point out how much we have done already: we are proud to have provided the equipment and help that Ukraine asked for. We have already committed over £750 million-worth of equipment, including Starstreak anti-aircraft missiles, new anti-ship missiles, 120 armoured vehicles, more than 6,900 NLAWs and more than 200 Javelin anti-tank missiles.
The noble Lord asked about the training of Ukrainian armed forces. We announced a new training offer, spearheaded by the UK, with a plan to train 10,000 Ukrainian soldiers every 120 days. Each soldier will spend three weeks on the training courses, receiving medical training, for example, and learning skills in cybersecurity and countering explosive attacks. Of course, this is on top of the 22,000 Ukrainian troops whom we have already trained under Operation Orbital since 2015, so it builds on the work that we have done.
The noble Lord and noble Baroness both asked about the Army in particular. We are creating an Army ready to fight the wars of the future, making it more lethal, agile and expeditionary. We are delivering the most significant modernisation of the Army in a generation. It will continue to recruit the talent that it needs to maintain a competitive advantage now and in the future, and it will continue to be one of the most technically advanced forces in the world. The Future Soldier transformation programme offers the best combination of people and equipment within the resources that we have. Under the Future Soldier transformation, the Army will have a whole force of over 100,000 troops.
As these three international meetings showed, we will continue to play a central role on the global stage and play our part in trying to help all our allies, particularly in light of the events in Ukraine.
My Lords, I thank the Leader for repeating the Statement. I have two questions. First, all these summits agreed that there needs to be an increase in defence spending; this was said most loudly in NATO, but it also came from the other two summits. Given that the British economy is growing so slowly, where will cuts be made to other expenditure to fund that increase? Will the Government lead the necessary national debate, as we get our minds around that consequence? Secondly, as the Minister outlined, we have been very generous to Ukraine; that has come from British inventory, so can she update the House on plans to fill the gaps that are now appearing in our inventory?
As I said, the investments that we have made and outlined mean we will be on track to spend 2.5% of GDP on defence by the end of the decade. Future spending decisions will be for the next spending review, and no doubt there will be many discussions about that in the run-up to it. In relation to our inventory, the Ministry of Defence is working hard to ensure that we have the right amount of munitions, weapons et cetera that we need.
My Lords, we on these Benches support Her Majesty’s Government in their response to President Putin’s invasion, as I am sure will our General Synod which is debating the matter this weekend. Aggression must not be rewarded. My right reverend friend the Bishop of St Albans has previously assured this House that the Church stands ready to use its reach and connections to pave the way to a solution, and we also stand ready to use our extensive links to humanitarian organisations. May I therefore ask the Minister to expand on what is being done to ensure UK aid support reaches all those who need it, particularly through the informal volunteer groups, which have so far received only 0.24%—less than £1 in every £400—of direct donations, and to consider how faith organisations, including the Church, can pay their full part?
I thank the right reverend Prelate for his comments, and I pay tribute to the Church and other faith organisations for all the help and support that they provide in a whole array—both in the UK to refugees coming over here but also within the region. We will continue to work very closely with faith groups, but also civil society more broadly, to provide the support that communities around the world need. We are a world leader in development, having spent more than £11 billion on ODA in 2021. In 2021, we were the third-largest ODA donor in the G7 and the fourth-largest overall donor by volume, and we remain very proud of our work in this area.
My Lords, I think that the noble Lord, Lord Browne, knows what I am going to say. I think that it is only right that, when a noble Lord arrives five and a half minutes after the start, he should not really speak. But I do accept that there are not many people here. I think it would be good if the noble Lord allowed people who were here at the beginning of the debate to speak, and if there is time afterwards then he might be allowed to speak.
My Lords, I thank the noble Baroness for the Statement, which has a lot of hope and a lot of challenges in it. I chair the board of Christian Aid, which has been working hard in Ukraine ensuring that incubators are provided, because two hospitals were destroyed, and there have been a lot of miscarriages and premature births taking place. We thank the Government for the disaster aid that has raised a lot of money, and through your offices, again, we have been able to help out.
On defence, during our debate on the humble Address I brought up the issue—as everybody is wanting to look at more lethal weapons—of the whole growth of unregulated, autonomous robots. These are very good at not being controlled by a person but have been set within themselves, and their destruction is unbelievable. What are Her Majesty’s Government doing to create a treaty which will limit the way that these weapons are developed?
I thank the noble and right reverend Lord for his comments—I apologise: it is a new one on me and I did not want to make a mistake. He is absolutely right that we all need to work internationally to tackle the many problems, a number of which he alluded to, to ensure that we have a safer and more peaceful world.
My Lords, does the Leader of the House accept that there are two damaging ambiguities in this Statement which undermine its credibility? The first is a passage that says:
“our goal must be for our Ukrainian friends to win, by which I mean that Ukraine must have the strength to finish this war on the terms that President Zelensky has described.”
Is that the United Kingdom indicating that it would provide support if an attempt is made to expel Russia from Crimea, with all the consequences which that would raise? The second is where the Statement says—“you” having introduced the Speaker into the exchanges—
“you will draw the logical conclusion that the UK will likely be spending 2.5% of GDP on defence by the end of this decade.”
But 2.5% of which GDP—of the GDP of today, or the GDP of 2030? Surely, we are entitled to detail of that kind.
As I have said, future decisions are for the spending review, but the Prime Minister has said that he expects it to set out a trajectory towards 2.5% by the end of the decade. In relation to the noble Lord’s first comment, President Zelensky made clear during the Prime Minister’s recent visit to Kyiv that Ukraine has no interest in surrendering sovereignty, and we want to support it to finish the war on the terms he describes.
My Lords, my apologies for arriving a minute late to my noble friend’s Statement; it came up a fraction sooner than I expected and quicker than I could run to get here. I wish, if I may, to ask a question, but first of all I agree with those who welcome the orderly transfer of the secretary-generalship of the Commonwealth. As I said in the debate which we had on Thursday on this subject, I think that is the right way for it to go: it gives the present secretary-general a chance, as it were, to wind up and complete her term of office—I know that she has some more leadership ideas for facing Commonwealth difficulties to share with us, so that is a good thing.
My question is this. Did I hear in reports, but not in this Statement, that at the G7 the Ministers and the Heads of Government entertained the idea of trying to create a counter to the belt and road initiative of the Chinese, which now involves memoranda of understanding with 141 countries, and two-thirds of the Commonwealth as well? This is a huge entanglement by China. I know that most of the first two gatherings were about Ukraine, but it is relevant because it is of course China’s neutral stance that is influencing half the world not to support us in challenging the Russian atrocities, but instead apparently to condone them. As long as that goes on, and half the world is not with us against the Russian horrors, and against their attack on humanity and international law, then Putin is going to get some encouragement to continue, so I would like to know whether there is anything in the brief on that particular subject.
What my noble friend is asking about is the Partnership for Global Infrastructure and Investment, which I mentioned in response to the noble Lord, Lord Newby, which is the G7 initiative to narrow the investment gap for sustainable, inclusive, climate-resilient and quality infrastructure in emerging markets and developing countries. We, through the G7, intend to mobilise the private sector for accelerated action and support just energy transition partnerships. As I mentioned, one has already been set up with South Africa, and we are currently working towards further partnerships with India, Indonesia, Senegal and Vietnam. It is that initiative that the G7 will be developing within that space.
My Lords, my question follows on from that, on the Partnership for Global Infrastructure and Investment. Will the Leader of the House agree with me that it is crucial that this money avoids the errors that have happened so often in the past, where money has gone into the priorities of investors rather than the needs of the poorest in society? Will she agree that this money needs to take a rights-based, gender-sensitive approach, delivering a just transition rather than ensuring that the rich in some countries get richer and the global north benefits—particularly in ensuring that the global south does not get laid on with even further levels of debt burden when it is already carrying levels of debt that it is unable to afford?
I certainly agree with the noble Baroness that we need to make sure that this initiative delivers for the poorest countries in the world, and that we work in a collaborative and effective way. That is what is happening in the development of this partnership. As I have said, we already have the first one announced, we are working towards several more, and we will support partners in developing countries and emerging markets in a fair and sustainable way.
My Lords, will the Government emphasise that we have no quarrel with the people of Russia, but only with their misguided leaders? As regards Ukraine, will they try their hardest to keep open all channels of communication, whether diplomatic or other? Finally, will they identify and use all possible intermediaries to end the war and open the way towards a verified and durable peace?
We have said before—I certainly have at the Dispatch Box—that we have no quarrel with the Russian people. I am happy to restate that. We will support our Ukrainian friends so that they do not have to suffer in the way that they have, and we will work with President Zelensky to achieve the outcome he wants.
My Lords, President Putin has more than once suggested that he stands ready, if he thinks it necessary, to use nuclear weapons in pursuit of the Ukrainian war. Has it been made clear to him that the first use of any such weapons, whether tactical or strategic, is out of bounds, and that any nation taking that step would meet retribution—which in the case of Russia could be terminal?
My Lords, we are already in a very fraught situation and I do not think that speculating on such things helps at this point. What we want to do is work with our allies to support the Ukrainians and continue to point out the fallacy and wrongness of what President Putin is currently doing.
My Lords, I apologise too for being late for the beginning of the Statement. I had expected it to be later in the evening and my office is in Millbank House. Anyway, I can assure the noble Baroness—to whom I apologise profusely—that I have read the Statement, because I have a very specific question and wanted to see whether there was any reference to it in the Statement, but there is not. As part of the US increasing its military presence across Europe, two more squadrons of F-35 stealth jets will be stationed at RAF Lakenheath, which is leased to the US air force. Can the noble Baroness reassure me that these will not be the dual-capable variant of the stealth aircraft, and that we will not, some time in the future, face the challenge of the United States wanting to base nuclear weapons in the UK once again?